Flags aren't really incentivized in this proposal (we don't know of a good method to do that even if we wanted to), they just stop being so costly. You still earn essentially nothing by downvoting. Your other content does go up every so slightly slightly in payout all else being equal, but it is quite negligible (and your other content too can be downvoted if don't have sufficient merit)
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Bad choice of words. Less-disincentivized. Don't get me wrong, I am in support of trying it as I would like to see how it plays out. I understand that people fear flags and that should change (my first flag was from you a very long time ago :D ) and I would hope that it would make people think twice or up their standards before boosting nonsense.
There is no point discussing forever something that can be trialed quite cheaply. Work or not, either way, we would have better knowledge going forward instead of only predictions.