I saw a post by Welsh saying that moderation reports have been in decline and that he misses the days when he woke up to hundreds of reports in his queue. It got me thinking of ways to jump-start it again.
The whole forum activity has been in decline for some time so no surprise that reports are in decline too. Another thing that might pad the stats are reports in altcoin section, which were very popular year ago (due Spambuster of the year award) and without it, majority of members don't have much incentive to report.
The steep carrot/stick ratio is to prevent would-be abusers from gaining any traction.
Make no mistake, whatever can be abused here will be abused, no matter how many reports they have to make in order to get one merit. All this would just burden the mods with extra work and in the end wouldn't really help removing the spam.
Imho, way more elegant solution to make people report more is to introduce some sort of badges for the most active reporters as that's what people asked for repeatedly.