Just to provide a bit more detail. It depends on the flag you use. In this case using Inappropriate would not have shown the moderators the exact verbiage, but using Something Else would have, as the Message moderators would have received would have one-boxed the post in question (assuming it was in a public category).
One thing to note, the Flags Admin area, does show the edit, but when the Moderator views the Message, it shows the original content (screenshots below).
Admin > Flags Area (shows edited message)
Clicking Reply: (shows original message)
Might be off my rocker here, but what if, we changed the logic for the grace edit window to only apply if no flags are on the given post and it is within the edit time frame?