Here are my suggestions:
I think the best idea (especially to share the bag) is to purchase shadow boxes and make 4 (Jen and 3 brothers) framed pieces they can each hang in their homes. Using the heavy green canvas for the background, Jen can customize each one. Use the straps to create a border (or just a top and bottom border) or use patriotic ribbon for a colorful accent. The buttons on the bag along with a photo of dad with each child can be added in the box or a photo of dad in uniform. The identification tag can be cut and used prominently. Add a USA patch or a medal or military patch of dad’s and perhaps an engraved plaque at the bottom with dad’s name and rank.
A good framer can do all this and more, but it can get pricey. I am thinking Jen can do this herself for a lot less money if she purchases the shadow boxes at Michaels (use your coupon, Jen) and cuts and irons the fabric perfectly before gluing it in place as the backdrop. Each frame can be individually decorated with dog tags and other sentimental items. The shadow boxes do not all have to be the same size and need not be identical when completed. The shadow boxes come in white, black and a deep mahogany stain – some are very plain while others have a beaded edge.
Camouflage fabric is also available if there isn’t enough of the canvas duffel bag fabric.
A second idea is to purchase a small ottoman (see photo) that has a removable lid and cover the lid with the fabric from the bag. I don’t think there is enough fabric to cover an entire footstool, although you could supplement with camouflage. A good upholsterer can use the straps to “trim” the top and it can also provide a bit of storage.
A couple of small pillows can also be made from the fabric if it is carefully cut. Again, use the straps for accents or “stripes” and miter the corners and sew on a USA patch or one of Dad’s patches in the bottom corner.
Jen, I hope these ideas will be useful and send you on a personal journey to utilize this wonderful keepsake. I am sure you and your brothers have many mementos that will honor your dad. I would love to know what you finally decide to do.