I know this is late, but hope it gets considered.
Add a feature to address the flaws with the flagging system.
While it's a major benefit to allow flagging, there are still some things that can be abused. I suggest implementing a feature to allow the community to dispute flags. This is how it could work.
Flagger chooses a reason for flagging. Everyone can see this reason. The community may choose to dispute or affirm the flag. Flag affirmation votes are weighted by REPUTATION, not power.
Proper disputes or affirmations can work just like curation to earn steem and reputation.