Comment flagging could be a community tool against the often rough tone on SO. However, the current comment moderation system isn't suitable for the purpose. It's not useful for anything but the removal of really outrageously offensive stuff. That's because it's almost completely opaque:
There is no indication to the outside world that a comment has been flagged. Until it is removed, drive-by visitors see abrasive comments just hang around there seemingly unchallenged. That helps grow the sentiment that SO is a place full of hostile jerks.
There is no indication to fellow users that something has been flagged. Such an indication would encourage inspection of the comment, and signify there may actually be a chance to get the comment removed.
There is no feedback about flags to the commenter, giving the process zero educational value.
If the tone on SO is supposed to become friendlier, flagging should become a public process. It would help streamline the flagging itself, and flags cast by the community would show to the drive-by Googler that rude comments do get challenged around here.
What should be done:
Hide flagged comments quickly, before the deletion threshold is reached (say, after 2 flags) from the eyes of unregistered and low-rep users. This hides bad comments from the world but gives the community enough time to dispute bad flaggings. The comments stay visible to registered and higher-rep users; when enough flags have amassed, the comment gets deleted and becomes visible only to mods, just as it works now.
Show comment flags publicly, as small symbols next to the comment. Allow users to cast more flags, or dispute them.
Provide commenters with feedback on deleted comments - perhaps a system message in the inbox detailing which comment was deleted:
Your comment on the question "how to flobber the gargle?" was deleted as "Rude or offensive" by 3 other users. Click here to check out our community guidelines on commenting.