I just encountered a post with 6 offensive flags while processing the queue:
(7 is the total number of flags including red flags; the 7th flag is a regular flag.)
Normally, when a post accrues 6 red flags, the post is automatically deleted, but it never happened with this post. The only thing in its revision history is a single edit. That edit wasn't rolled back either. So why wasn't this post auto-deleted?
Apparently, the first 2 offensive flags were marked as disputed. I'm guessing this happened as a result of deleting them manually (instead of dismissing them as helpful or declined), which a moderator is able to do at any time. The next three were marked helpful a very short while later (?!) and there's a new one pending, making the total 6, leading me to writing this.
It's still quite unclear to me whether red flags that were dismissed as helpful (the three I mentioned) still count toward the auto-deletion threshold after being dismissed, but seeing how the post has a total of 6 offensive flags and is still not auto-deleted, it's more likely that the first two flags that were removed by hand were rendered ineffective in that process.
If that's the case, those flags should probably not count into the total number that's displayed in the queue and the mod overlay either.