When dismissing an automated flag from the Community user, is my choice of Valid vs Invalid taken into consideration by the automated flagging algorithm?
While I cannot find any clear reference, past posts about this system suggest that the heuristics it uses to determine what to flag and what not to flag are not adaptive. They don't change without someone going in and changing the code.
More specifically, choosing valid or invalid does not change what is and is not flagged by this process. As Jeff indicates it does change the weight this process's flags are given compared to other flag events. It is hopefully subject to the same system that notifies moderators if a user is consistently flagging things that shouldn't be, which would then be a sign that the process code needs to be adjusted.