The problem with flags / downvotes is not that they are wrong as a system to regulate the pending payouts or to fight abuse, but for their negative emotional implications for a regular person who is otherwise non-conflictual (for both the downvoter and the downvotee I believe; and probably for the watchers of the spectacle as well).
I know it has been a major effort to rebrand flags into downvotes for exactly this reason: to try to soften the negative implications of using the term flag.
But, in essence, the functionality is the same. Actually, I'm wrong: downvotes are more powerful than the former flags, since there is a free downvote pool.
In a war, there are always battles won and battles lost. But it's still a war. And some people want peace (I know, what an utopia!).
Steem may be wild west, but communities don't have to be and probably won't be.
The fact remains that abuse would be rampant without them. There has to be a disincentive.