I think as people have become more and more aware that flag negatively weights items for rankings, and isn't just a "hey have the mods look at this rule breaking thing", more people have started using it as a downvote button. It was my understanding that HN originally didn't have a downvote feature to avoid the kind of issues that the flag usage is now causing.

Even the highest karma users can lose their flagging privileges, temporarily or perhaps even permanently, if they do it enough times within a time window or if abuse is detected. So from what I understand that issue should be taken care of.