Flagging helps for sure, but in my opinion it isn’t as dependable as active moderators (esp. moderators that could easily see all the latest replies in a single list).
I don’t see it as an either-or scenario and see community flagging as more of an extra redundancy than something to depend on.
Especially if you want to minimise the exposure of unacceptable content to those active users who need to flag the content for the moderators. Also, anonymous users (i.e. lurkers) have no way to flag content and they often represent a significant amount of ‘users’ on public forums.