When looking at @pibarabot's reports, there are basically four kinds of flag usage:

• Policing flags against abusers
• Corrective flags against disproportional projected payouts
• Capricious flags by some of the big guys: because they can.
• Retaliation flags. Tid for tad.

I used to think capricious flags were a big problem before I started looking into it. @freezepeach has the low end of this problem covered and while we could probably use an orca sized @freezepeach, the number of people affected by true capriciousness is actually quite limited.

Today I believe the true problem with flags is the culture of fear brought on by retaliation. Most users really don't flag enough for reason #1 and #2 out of fear. If they did, crap post that bought their place into trending would likely get flagged down en-mass and we wouldn't have the self amplifying bidbots reputation problems.

Use bidbots, increase your rep, become immune to reputation damage because of your high pseudo rep, and from monetary concequences as well, as people with lower rep won't risk flagging you out of fear for retaliation.
In fact, people with higher rep won't dare to flag you because they know your rep will surpass theirs because of the bidbots, and you might retaliate later.