Actually, i think you just /sa i will tell stories, and he upgrades the current charm in your inventory. Yes you must go back to him after acquiring each flag.
If I get this as a 60 rogue who has only been hunting in PoN and PoV will the stats increase as I go up to the more challenging planes or do I have to go back to this guy to get a new one once I have more flags???
As with all the Intricate Wooden Figurine entries, the stats currently being shown by Allakhazam at the time of this posting (showing 10 to all saves) are those with max stats. Players with access to fewer planes have correspondingly lower bonuses from these charms.
The planes counted for this charm are: Valor/Storms, Crypt of Decay, Halls of Honor, Bastion of Thunder, Tactics, Torment, Tower of Sol Ro, Air/Earth/Water, Fire, Time.
Note that minor planes (Lair of Terris Thule, Temple of Marr, Ragrax Stronghold of the Twelve) do not count, and events which provide access to multiple planes (such as Valor/Storms and Air/Earth/Water) only count once. Key-quest access to planes (such as the Box of Souls quest for Honor, or the Diaku Raiders quest for Tactics) *do* contribute to this charm's bonus.
I am not quite sure how the values round when they are not even numbers (10.2 rounds down to 10 for the AC in the above poster's example) - perhaps someone will be able to confirm this.