I don't have a full solution yet, but I'm thinking about it from time to time. Unfortunately it will probably be a hard sell and if implemented the wrong way could be dangerous, which is why I've not talked a lot about it this far.
Neither Busy.org or beta.Chainbb.com utilizes the flag icon or hides messages. As far as I know, messages only become collapsed on Steemit and blacked out on eSteem.