I'm an estate owner and I have the reports set to come to me. Though, there seems to be a bug in the current RC viewer where adding the email address in there doesn't seem to 'stick' once the preference window is closed.

Either way, I plan to investigate, should anything like this come my way. If it turns out to be a false report ( I hear many are AR-ing child avies as RL underagers to get their accounts frozen) - I'll banned the reporter from my estates. If the one being reported is to be at fault - same thing.
Of course, not everyone will be banned - that's for the heavy-duty offenses - serious griefing, etc. But other than some kind of temporary or permanent ban, what else can I do? Nothing.

And - my actions affect only my estates.
So... I don't know how well this particular method will work.

We'll see, I guess