You neglect that minnows can be crushed by retaliation. Making downvotes free to minnows does not protect them from retaliation. That's the real reason minnows don't police whales, not because it costs them VP to flag.
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I flag trash. You have received a flag.
I mostly agree, but I would say it is additive. You have the risk of retaliation and also the cost. Reducing the cost helps somewhat, but it doesn't go all the way, and indeed may not work.