Still thinking about this... so you deserve extra replies. Hope you don't mind.
WHO DO WE REPORT TO? WHAT ARE THEY GOING TO DO ABOUT IT?
Yes, I do see that conundrum.
It could be abused. I'd like to see the flag come up as a choice of plagiarism, spam, abusive.
People could still false flag. So how do we deal with that? I think Dan's down voting flags if they are false flags is not a bad idea.
However, I am seeing a number of people being flagged simply for disagreement, or anger, or spite, or retaliation for being flagged. We've seen these things on reddit as well.
Yet there they do not also reduce monetary income. I believe it could be much worse here.
We have a pretty civil and intelligent group of people here now. It likely won't always be thus.
Yes, you're describing the dreaded bad whale attack. Zuckerberg powers up a few dozen whale accounts and goes to town destroying everyone's reputations... Steemit dies. Right now the defense is for the good whales to catch the bad whales before they do too much damage, but that is a not a good long term solution.
I think my suggestion of validating flags/downvotes by upvotes might be a good way forward.
Wrote a post about this, have a read and let me know what you think: https://steemit.com/steemit/@johnsmith/how-to-solve-the-downvote-conundrum-with-one-simple-trick-upvoting-downvotes