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I think that it's a good system, so long as the mods are moderating *that* system. It lets the community do the heavy lifting when it comes to moderating the forum. I've been trying to figure out a way to do such a thing, and I think that this system is as good as I've seen - despite the fact that it does invite a fair amount of drama when people want to start mincing over what constitutes racism and what doesn't. Which isn't altogether a bad discussion to have. But at the end of the day, it forces people to consider the audience - the community - and think twice about posting over the top stuff.
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