Earlier quoted context omitted.
and are, essentially, burning thermite What makes you think flashbangs contain thermite? From what I can tell they contain a small amount of explosives[1]. The filler consists of a pyrotechnic metal-oxidant mix of magnesium or aluminium, and an oxidizer such as ammonium perchlorate or potassium perchlorate. [1] http://en.wikipedia.org/wiki/Stun_grenade
If I remember my chemistry correctly, thermite = aluminium + an oxidizer. So the filler you are describing is thermite. Edit: I worry I may be incorrect. Thermite seems like a very odd thing to put in a flash bang. Perhaps it is only a thermite mixture but the reaction is different?
If you replace the iron oxide with another oxidizer, it's not really thermite (since no iron metal is produced) and it turns it from a very exothermic reaction into an explosion (with the right oxidizer).
They do make thermite grenades, but they are typically used to destroy equipment, not make a loud sound (as flashbangs are).
If the police were using thermite grenades for raids, that would be even more horrifying than it already is.