I figured it out!
Sort of spoilers below?
This is my best guess (please confirm @epicpikaguy)
The game is trying to make a flag with greater than 9 steps. Since the game won't let you have more than 9 steps, it freaks out and gives you a negative number corresponding to the positive number. (which is why if you continue far enough, the step counter will be -65525, *blank*, 9, 8, and so on.) Next, the game tries to make an image on the flag for the number. Since it can't find a dot image, it searches in the game image database and finds another image, which it places on the flag. I still have no idea why the game is trying to make a higher than 9 step flag. (For confirmation help, the "wormhole" flag gives 24 steps.)