Problems I see:
How disputed flags work: as I argued here, disputed flags are useless and might do more harm than good.
Really, what is the incentive to flag a flag invalid? The way I see it, I'm spending one of my own flags to ensure the user who flagged incorrectly doesn't lose any flag weight as they should, while I don't earn any FW.
The penalty for incorrect flags is way too high as your flag weight improves. I'm capped at 750 right now. If I get one invalid flag, it will take 92 of them for me to get back to where I was. This strongly discourages folks with high FW to flag questionable content (at least that's what I think).
Granted, since your flags have more weight, you should be more responsible while flagging. But the risk-reward ratio is way too high IMO. In fact, if you have maxed out FW there is no reward at all.
Users with close privileges (ie: > 3k rep.) can't flag questions as "doesn't belong here," since that makes them cast a close vote instead.
If we encourage users without close privileges to flag questions that don't belong, why don't we encourage users who cast (correct) close votes as well?
Flags found in /tools/flagged (10k only) are an easy way to "farm" flag weight. What I mean is, it takes much less effort to go through flagged posts and re-flag them than to use /review or flag posts "in the wild".
About 90% of the flagged posts have "correct" flags, while less than 5% of posts found in review are flag worthy (these numbers are guesstimates based on my own experience, not hard facts).
Lack of a neutral resolution (with the possibility to add a custom message) that doesn't impact the flagger's flag weight. This would be helpful in guiding flaggers without punishing them. Currently, moderators can't provide custom feedback unless they decline a flag.
Flag dismissal decisions (eg: helpful or declined) can't be reversed. If a mistake was made, we can't fix it. This results in a ton of flag weight grievance posts on meta.