A higher rep person won't has their rep hurt much (to almost not at all) by someone with lower rep. However the amount of Steem Power held by the flagger does still effect payout. They're essentially separate mechanics. Reputation isn't something actually on the blockchain, only on Steemit.com. The rep we see here isn't available to other sites like busy.org or chainbb.

I do have a post that get's into this with some more depth (even a bit of over the top mathy parts, lol).

https://steemit.com/steem-help/@sykochica/answering-common-questions-reputation-and-flags-what-s-this-number-by-my-name