I think downvotes ("flags") have a place, but they are currently not implemented ideally in the rules. I think they're also being misused by some whales, who are acting as gatekeepers of Hive payouts, chopping down people who grow too quickly, or who threaten their dominance. Perhaps this isn't technically against the rules here, but it's troublesome nonetheless, and I share many of your concerns.
RE: Downvotes & Reward Policing: Abuse of Power or Good for the Platform?