I just tried it out. I need to add it to my site too and the 50 points bounty was enough incentive to move it up on my list ;-)
After installing flag and flag_terms you create a new flag and select "Taxonomy terms" as the "Flag Type". Configure the text options, select a vocabulary (or many), permissions and select the "Display link on taxonomy term pages" checkbox.
Then view a few terms on the standard term page and flag them using the new link.
Then create your view for content from your selected "vocabulary". The trick is that you have to add the "Content: Taxonomy terms on node" relationship first. Only then can you add the "(term) Flags: termflag (by current user)" relationship and select your "term flag" you entered previously. If you "require this relationship" it will only show you nodes where the term has been flagged.