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Re: KüFlGr.506 and Propagandaballonen.
There's no way air crew could mistake a barrage balloon for being anything other than a barrage balloon as then were anchored at the target being protected and almost all - German, British, American, French, etc. - were more or less the same size and shape. So I am guessing their "propaganda" balloons were either exactly that or perhaps weather balloons. A propaganda balloon usually carried leaflets that were released over the target country. I think you can find more details on this type of balloon on Google.
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