Hello,
for what it's worth i also think this is ammunition for a signaling pistol, however i have yet nowhere read, how and when this was used, during a mission.
Flyboys, well - i have not yet seen the film, it was not even in the german cinemas back then, and i have not seen the recent von Richthofen film as well, where this pilot fires at a balloon, setting it on fire with such a gun, or pistol (?).
According to some other reports balloons were indeed set ablaze with signal guns now and then, but according to a friend hopefully to become, who is an authority in all things lighter-than-air, it was not easy at all to set a ballon ablaze, or a Zeppelin. Even the later incendiary ammunition would not ignite a hydrogenium bag, instead it was a time consuming task, and that is why so much pilots were killed during such missions - they had to stay on the scene and wait for some minutes until the final "kill".
Gretings,
Catfish