I don't like the mob thing either but it's how large group dynamics on the internet work (by default). We try to mitigate it where we can but there's not a lot of knowledge about how to do that.
What authority do 'top karma people' have?
I have 25,772 karma, for what it's worth, and you have 2. I don't think there's anything I can do here on HN that you can't do?
(Hah, and I just noticed that my account is two days older than dang's!)
There are a few places in the code that consider karma but IIRC it's never more than 500 (the downvote threshold). It's actually on my list to add more goodies for higher levels - maybe something like linkifying URLs in user profiles - but it would not have anything to do with authority on HN itself. We want the best comments and the best arguments to 'win', not skew things in insiders' favor.
Also, a lot of the high karma accounts got there by posting links, or just by grinding their way up by posting a lot of comments, or because they're 'famous' for something. Karma doesn't represent any sort of unusual power or authority. If you think it does you're reading too much into it.
How would one know if flagging wasn't abused? I've had comments flagged that get unflagged a day later. Were there any consequences for the person who flagged the post?
Yes, and I also do it, but very rarely and as an exception (and I am strongly in the position of "sniping weakens the system").
The issue is that it is possible that the censor may have misunderstood and missed something that was not clearly expressed.
I'd argue that in this case it's also in the interest of the community to downvote, since the comment adds more noise than it contributes to the discussion. In the end it's a ranking; if other comments are better worded and clearer, everything else being equal, they deserve to be higher up.
Part of the issue is HN is too broad. Whatever goes here, really. Communities that work are focused on specific things.