Censorship is not possible on Steemit due to the fact no one has control to remove content.
Flagging is a gift to the community
Not only does it burn their votes, it burns yours and gives it back to the community reward pool. There are no police officers patrolling Steemit removing bad content or punishing bad actors, it is left to the community to handle it.
Everyone here is all happy to receive upvotes from random people usually with no regard to a damn thing you wrote, but get a flag holy shit the world is going to end and there is a terrorist on the loose.
Your position that censorship is only the utter deletion of content isn't complete. I was just editing my comment to add the relevant portion of the Oxford English Dictionary definition of censorship: the suppression or prohibition of any parts of books, films, news, etc...
Flagging to invisibility definitely, incontrovertibly does suppress content. Flagging can do much worse, and render accounts invisible, which @skeptic is an authority on. He has been flagged into invisibility and recovered his rep afterwards, which takes quite a bit of work.
I agree with you 100% as to the financial benefits of flagging to the community, as well as the common response to being flagged. I have often stated my belief that flagwars may be the best thing whales can do for minnows, at least that they are willing and able to do.
You probably missed the edit I just made where I state that I have acknowledged that flagging to the degree that it becomes censorship is beneficial to Steemit; that censorship itself is necessary not only to eliminate spam, scams, and criminal acts, but to reign in commercial endeavors excessively rapine, as @contentjunkie is, IMHO. I further agree that promotions for commercial activity may be appropriate--which you may recall is a HUGE change in my position that votebots are bad.
However, those both necessitate that commercial activity and personal intercourse be treated differently, because censorship of personal opinions isn't appropriate, and neither is the kind of advertising @contentjunkie undertakes for personal intercourse, and not even for commercial endeavors. Part of the problem is that votebots promote content by drawing down the rewards pool, and advertising can be profitable as a commercial endeavor itself, rather than only by attracting potential customers to your product. I think that's the only reason @contentjunkie does it.
If advertising was profitable in that way outside of Steemit, we'd never hear or read anything but advertising.
The extant code of Steemit creates these problems, and they can't be solved (IMHO) otherwise. Various mitigation attempts seem to inevitably cause more problems than they solve. Your effort to blacklist profiteers is an example, reducing your earnings per hour of work from your commercial endeavor, while unscrupulous botters that don't bother are rewarded financially for not bothering.
I apologize for the confusion caused by my late editing of my comment. Thanks for taking the time to consider my points.