The app-indicator applet has an ugly keyboard icon which is not monochrome like the rest. It appears when you are using another additional language. It is a terribly ugly icon that sits besides "USA" or any other language, e.g. "RUS"; clicking either would present a list of languages you added, to choose from.
To remove it and retain all functionality in the language-switch indicator, simply search as root (or "sudo gnome-search-tool") for "input-keyboard" and delete all the .png files. It has zero effect on the system and deletes only the icon up in the panel. The indicator itself is still functional minus the icon, in the form of "USA" or say "RUS".
So if you want a totally monochrome panel, without this ugly icon, this simple procedure would solve it.
Screenshots before and after using this tweak:
(before)
(after)
To simplify the process and not having to remove the icons manually, simply run the following command in a terminal (this will append ".old" to the "input-keyboard.png" and "input-keyboard.svg" files so they can be restored later on if you want):
find /usr/share/icons/ -name "input-keyboard.??g" -exec sudo mv {} {}.old \;
Then, open the Appearance Preferences, change the icon theme to some other theme, then change back to Ubuntu-Mono-Light or Dark (or whatever theme you were using).
To revert the changes, run the following command:
for i in $(find /usr/share/icons/ -name '*.old'); do sudo mv $i ${i%.*}; done
Update 1 (thanks to tom bob for the tip!): you can also use some monochrome icons for the Keyboard indicator (only available for Ubuntu Mono Dark icons - for dark panels) - download them from here, extract the icons to ~/.icons/flags, then run the following command in the terminal:
gconftool-2 --type bool --set /desktop/gnome/peripherals/keyboard/indicator/showFlags true
Then change the theme to any other theme, then back to Ubuntu-Mono-Dark. If the icon doesn't change, log out and log back in.
Update 2 (thanks to Mahdi): if you want to use real flags, download these icons, extract them to ~/.icons/flags and then run the following command:
gconftool-2 --type bool --set /desktop/gnome/peripherals/keyboard/indicator/showFlags true
Thanks to Jeff for the tip and abelchiaro for the improved find commands!