The fact that it is a symbol of pan-Germanism IS exactly the problem in Austria - which is not and has never been a solely Germanic state (that's why the cornflower was banned in the Hapsburg times). That symbol is extremely explosive in Austria (much moreso than in Germany) for that reason - it's a blatant symbol of xenophobia against any Austrians or residents of Austria which are not of Germanic origin ... a large portion of the population, especially in Vienna and the southern and eastern parts of the country (Burgenland, Kärnten and Steirermark).
An FPÖ parliament member made the news for wearing this sash to a formal event, for example:
Pan-Germanism in Austria (and Switzerland) is an extremely divisive and dangerous thing that pops up from time to time (generally when the economy is crap, as it is now).