I think the reporting feature is overall a very good and well implemented thing. In opposite to the OP i believe that its value is not in the possible punishment , but is in the "staged threat". At the end of the day, the goal is not to have someone kicked from the server, but to have all players play together in an aware state about teamhitting.
There is a second advantage of the feature which is, that it gives a guy who got teamhit the opportunity to express his anger in an legal, non-excessive way. Imagine, what would happen if the feature wasnt there ... everyone who would usually report, would now have 2 options left, to either suck it up (which would result in an discharge of accumulated anger later) or express his anger freely in the chat, which would propably done by insulting, resulting in more insults.
Furthermore the feature is implemented in a rather seemless and barely exploitable way ... at least i havent heared many reasonable complaints about reporting-exploits...
People who complain about getting reported should kindly man up and accept to get reported for a teamhit. If they wouldnt teamhit , there would be no reports for them (or only very few).