This was very well written! Flagging definitely is justified in some cases if the user is plagiarizing or spamming and continues after being warned. 

You hit the nail on the head with this:

>  There are going to be problems with steem and steemit. We cannot magically expect them to be fixed. This is something that has never existed before. This means it has new challenges as well as opportunities. We as the community can solve a lot of them as changing it in code often will not be the answer.

There are so many issues that will arise over time, but as long as the community sticks together, we will be just fine in the end!