While I haven't examined the code myself, I have read from several who have that the code treats up and down votes symmetrically and does not mention "flags."
However, my confusion remains as far as the exact way reputation works in the latest fork of the system. I would love to know if that is truly symmetrical or not. Much of the discussion I've seen strongly implies that down-votes have a stronger impact on reputation than up-votes.
I am adding another comment, because I would like to mention that I think that a number of people (after deducting those who are here only for the money) find enjoyment in discovering such a surprising plethora of new talent.
Yes, I enjoy posting and being upvoted, but just as much, I find myself delighted by the discovery of a new to me talent and if I see he or she is young and struggling, Steemit offers me something miraculous: Without having to take out of my small out-of-steemit income money for upvoting, I have the ability to help thanks to the brilliant system devised here.
Downvoting or flagging - it kills that (and without reason for it existing beyond preventing crimes).
I agree. I have met friends here that I value very highly, no matter what becomes of Steemit. I have also had some very enjoyable and educational reading.