As it currently stands, all users with more than 10K reputation can see flags on chat. This, however, might not be constructive.
Whenever a swarm of flags (or, really, any single flag) comes up, all 10K users on the chat network are alerted. This doesn't make much sense; the only thing this can cause is more drama, as many chatrooms over a certain number of users tend to flare up with "what's going on over here?" comments.
Removing the 10K ability to process flags actually wouldn't worsen the condition of chat, either - and it actually might improve it:
- Discussion about drama would be kept to the Teachers' Lounge, where it will be safe and sound and cause the least disturbance to people across the network.
- Many 10K users I've talked with actually don't want to see these things, since they don't have enough contextual information to handle problems, and can't do anything about these flags.
- Room discussions won't be derailed by large quantities of flags in other rooms.
It's not for want of manpower that flags aren't useful: it's actually a case where too many people have control over the outcome of a situation, so the case can't be given enough time to be reviewed properly. The ability for 10K users to handle flags certainly was more useful - and more necessary - when the network was smaller; however, now that the network has grown, there are pretty much always moderators on-hand who are available for flag-handling.