The moderators do read the threads that are flagged and will actively take action against anyone purposely using the flagging system as a downvote/censuring tool. They know it isn’t designed for that and do make sure that those that abuse it also end up understanding. They aren’t able to convey to us when they make those decisions though for the same reason we can’t name and shame on our end.
And this system is in its infancy with the WoW players. It’ll require some adjustments over time I’m sure to make it less abusable on our end and easier to review on their end. Introduction to Discourse as forum software is a start. Bornakk acknowledged the issue in a post as well.