Active members on titan hit and war hit shiuld have more rewards than members missing titans or participating wars without one hit.
Non-participating members do get worse loot, and participating members get better loot already.
If you don’t hit a titan at all, you get no loot at all, and no Titan Chest credit. If you hit some of your flags but not all of them, you won’t score as high, so you get a lower loot tier, and less chance for good loot.
In War if you don’t hit at all, you don’t get participation credit on the War Chest, so you won’t get full loot when you open it. I’m not sure whether you get normal loot from War if you don’t use your flags, but the War loot is typically nothing exciting unless you’re the top scorer…which obviously you won’t be if you don’t use your flags.