This seems very close to also being the description for community moderation. 
But if the same group of people are continually mis-flagging the same type of post/the same user then this pattern will be obvious to spot from the Review Queue info and they can then be dealt with further by a moderator.
There are also some built-in guards to dampen this behaviour as well where the accuracy of someone’s flagging has an effect on how much the auto-tools value their opinion. If someone keeps on casting flags which a moderator rejects then their accuracy score gets lower and lower, and their flags carry much less weight.
Sites can also adjust the thresholds for auto-hiding posts too, or turn it off completely, which can be very useful if they encounter a problem like this.
Ultimately though, if people are using flags to bully or harass other members then they’ve got to be dealt with outside of the auto-tools, as no one wants that behaviour within their community.
And, for the record, you’re right. That is a terrible idea. I do not recommend that in almost any circumstance.