If the downvote was used as it was intended, then calling it a flag would be wrong.
However, the downvote is sometimes used by whales to obliterate a minnows rep, by constantly down voting comments by the minnow, often on the minnows own post and comments which usually don't even have 1 cent! The only purpose of the flags is to destroy a minnow for revenge and adjusting rewards doesn't even feature in the whale's reasoning.
For example, the way @berniesanders flagged @Skeptic into oblivion. Yes Skeptic made a post that annoyed Bernie and Bernie had a right to flag that post to remove the rewards but did he have to then flag skeptic's comments until his rep was down to -6? The first hit was a downvote but the rest were flags.
Maybe there should be separate down votes which affect rep and payout and only certain people, such as yourself, should have the power to destroy rep.
Edit: Ironically, Bernie's rep was flagged into oblivion while I was commenting to him about his treatment of skeptic and I think that that was wrong too, even though he did get a taste of his own medicine.
Nothing is "destroyed" or "obliterate[d]". Reputation is a non-consensus calculation, which means it is purely a UI function and does not affect payouts, ability to post, or ability to vote.
The reputation system isn't perfect, and it's hard as hell to come up with a good one anywhere, let alone this place where there's a bit of a might-is-right thing that comes from the sybil protection of stake = influence.
Curious about your use of sybil as what your intent is? "Sybil is the most common spelling of a name which the ancient Greeks used as the generic word for a prophetess--a woman who claimed to be able to interpret the wishes of the gods through their oracles."
Stake = influence which is something of an aspect of might is right and is something that I don't see as a beneficial aspect of Steemit. It's much the problem that's present and dysfunctional currently in the world.
Why have a reputation qualifier in the first place? I had thought it referred to influence with newbies having the lowest. Ideally all would be treated equally; position is very much the ruin of life as high and low only have a only relative viewpoint that is highly impermanent and not worth emphasizing.
https://en.wikipedia.org/wiki/Sybil_attack
Many have tried to solve it, but usually just end up creating more dysfunction. Steem, being a decentralized permissionless blockchain needs a solution for sybil attacks, and that solution is to bring stake (with value) into the equation. If you can think of something better, by all means propose it. It's only slightly less difficult than a perpetual motion machine.
If you're unsure about the reasons for stake in STEEM Power being the measure of influence here, please read the Steem whitepaper. It's outdated in many aspects unfortunately, but it still explains the need for STEEM Power to be the measure of influence in Steem.