I mostly agree with this but I would bring up two points. 1) There's probably no reason to tell the user that downvoting will remove rewards any more than there is a reason to tell them that upvoting will add rewards. Some people already think that flagging them amounts to stealing and this would probably just reinforce that perception. 2) Changing the flag to a downvote will probably result in more people downvoting opinions they disagree with (regardless of whether there is a pop-up telling them about rewards)...or maybe not as there seems to be a lot of that already. 

At the end of the day though, having a downvote instead of a flag in the way that you describe would be far more consistent.