If you're talking about any kind of piloted aircraft, the human eye is pretty limited in seeing small/thin objects from a distance, especially while moving and focusing on more distant objects, like the ground, or huge structures like mountains, roads, or buildings. Moving at high speed, the aircraft also can't turn on a dime to avoid a line when it suddenly becomes visible. As fred_dot_u describes, the practical solution is to avoid areas where any form of aircraft could be.
As the question acknowledges, any form of fluttering ribbon will add drag and complicate management of the line (and unless they are large, won't add much benefit in visibility).
All that said, if you want to make the line more visible, I can think of an approach that could help. Eyes can see points of light that are smaller than the minimum visual angle normally required to detect an object (it's why we can see stars in the night sky or detect sunlight reflecting off a tiny, distant shiny object). Eyes also detect patterns even when the elements of the pattern are tiny and would be ignored if they were random.
You can capitalize on these effects. Wrap the line with a spiral of aluminized Mylar ribbon (long strands of tinsel if you don't have a source for a spool of ribbon). On a day with bright sunlight, that would make the line detectable from a much greater distance.
The more of the line that is covered, the more visible it will be; you would need the line mostly covered to have any utility. But the windings can't create a solid tube or it won't be flexible; you need separation between adjacent strands of wrap. You would need to adhere the ribbon to the line to keep it in place during use and spooling/unspooling.
A spiral of glued-on ribbon will still be flexible, but it will affect the handling. It will add bulk and weight to the line if you're planning on kilometers of line, and would make it less flexible than a "naked" line. It would also be pretty time consuming to wrap kilometers of line. You could reduce the drawbacks by wrapping only the portion of the line that will be high enough to create a risk.
In a comment, fred_dot_u suggested a variation on this. Building on that idea, you could attach tinsel pom poms to the line near the kite rather than trying to wrap much of the line. Perhaps the first three meters or so from the kite, you could attach 30 cm tinsel pom poms at an interval of say every half meter. That would create some drag, but it would be limited to a relatively short length of line that you wouldn't worry about trying to spool.
Note that this approach (or the emergency beacon on the kite, as suggested in another answer), only mitigates risk for a pilot flying at close to the altitude of the kite. If the kite is at a kilometer or more and the pilot is flying much closer to the ground, something only on or near the kite won't provide much line protection.
For any passive measure like this, let me add some thoughts about scale. People tend to misjudge scale outdoors. If the idea is to alert a pilot to avoid the kite and line, you don't want something that will startle the pilot when it suddenly becomes visible and close. That could result in hazardous emergency maneuvers. The pilot needs to become aware of it while they are at least the equivalent of a few city blocks away.
Think of traffic signals (a three meter string of pom poms that size will be about the same scale, equivalent to three traffic signals stacked end to end). If you're driving, you know they're there and look for them (unlike flying over the great outdoors). From several blocks away, you can see a collection of traffic signals but they're pretty small. Still, something that size in the pilot's path reflecting sunlight should be spotted.