There remains no censorship, this stuff is still on the chain. Flagging the hard just removes their rewards (and hopefully therefore the incentive to do it), reduces the visibility of the post if the front end (e.g. steemit.com, busy.org, eSteem, chainBB, etc.) respects this, and when their rep gets sufficiently low it will reduce the visibility of all their posts, again if the front end respects this.

Really removing this stuff would require the collaboration of a large majority of witnesses and as far as I know it has not been done yet, with no plans to.