I think that is already how it partially works. Atleast for the newer accounts with low Steem Power. The problems come when it's an account with high SP doing the abusing. If you have a bad whale here, hardly anyone would stand up against them, especially non-whales. We'd be too afraid of retaliation from them, due to them basically being able to blast you down to zero. Counter flag or not, it would ruin your account.

Sure, we as a community could burn his/her reputation to the ground, but he/she/it can take a lot of us down with him/her/it.

Retaliation from a low SP holder doesn't hurt too much and if it gets bad enough, any respectable member can ask the community for help in chasing this person off. It's when you stumble upon a rich prick who's a sore loser that you get into trouble either way...