In a future state of Steemit where there is a marketplace - I would have concerns about doing business with someone who had 500 flags, but if a flag and a downvote meant the same thing - then I would have no 'warning' for someone who actually did something worthy of 500 'flags'.

Yeah, i see your point. That said, i suspect the 500 flags guy probably makes a new account to use on the marketplace, unless hes both dishonest and stupid.

I think a marketplace would be a great developement, and i can even see it happening, but if it does, there is going to have to be some marketplace-specific reputation/fb system. The current rep system we use (including upvotes. downvotes on posts and reputation score) is insufficient to handle actual commerce.