Thanks for all of the great suggestions! Makes me want to make several more badges for different things, though I don't know what they'd be for.
You could give them for high levels of merit. Maybe a badge for 2000 merit and every thousand after that etc. I think high merited users should get some sort of badge/acknowledgement, especially since they're worthwhile contributors and it's very hard to game. There's no real benefit to merit once you get 1000 to become Legendary either.
Have you thought about adding some sort of privileges that come along with it? Nothing too amazing, but how about something like a bigger personal text or the ability to have a clickable link there? I've always thought that would be useful. Maybe a custom title? Editable or not. I think with having some sort of added benefits it would help the forum by encouraging users to report and everyone benefits.
For the original purpose, my favorites are:

(300 good reports)

(1000 good reports)

(5000 good reports)
Those are my favourites and hope they're used in some capacity whether for reports or merit.
Makes me want to make several more badges for different things, though I don't know what they'd be for.
I'd like to see a badge for banned accounts (maybe the mushroom cloud can work there?). It would help when reporting posts.
I wouldn't be against that, but I think just turning their rank to
Banned or it being under their rank would be better. It's annoying when users sometimes report an already banned member for copy and pasting etc.