I have the feeling that this report system is a joke. The amount of flamers in a game are ridiculously high, it's like they can flame because they have no hard penalties or whatsoever. Maybe increase the punishment so people tend to be nicer to each other, and maybe reward sportsmanlike behavior more.
The thing is that people have multiple accounts, if one account gets suspended they will just play with another. Maybe change it into an IP bann, or suspend all accounts that have been played on the flaming IP address.
Also flamers seem to win in this system, if you get flamed upon by a premade and they report you, you get a chat restriction for nothing.