Non staff can't see a users banned status, correct?
That's correct. Although, there can be telltale signs such as signature etc.
Is there a reason for that? Perhaps one "privilege" for a large number of reports could be the ability to see banned user status?
I remember having to check the modlog to see and it was a little annoying!
Probably, to prevent abuse. If someone is temp banned for a week or so, and this is public knowledge it could come up later down the line. I'm not sure about displaying banned members. It can be useful for reporting, but I guess removing their message if it infringes the guidelines is probably the right thing to do anyway.