1. "Quite a scene". It's difficult without knowing a bit more of the context, but I would say that it means that the show was very spectacular, with bright lights, colourful costumes, and so on.
2. To try to "wrap the issue in the flag of China" is to try to involve Chinese national interests in the question. In other words, the supporters are saying that shark's fin soup is a Chinese national dish, and banning it would be a great blow to the interests and prestige of the country. It is regarded as being a rather unfair tactic in any debate.