TL;DR: The idea here is that users who wield flags well should get some kind of incentive for being so effective.
First, I think all flags should have four times the weight of up-votes. So you can only flag 10 times per day before your overall voting power starts to suffer. Then, flags should also have a default in the UI of 25%, so nothing changes.
I'd also like to see a reward/punishment system in flagging. If you are the first person to flag a post that has a large payout, and the payout later becomes zero, there should be a reward for the first flag. The reward should be a 24 boost to voting power.
But if the post doesn't become zero, you should have a voting power reduction for 24 hours.