They're just trying to get free labour out of people who wants to be a "hero". Which if people are very much worried about the size of their e-p***s, would gladly take this offer like people on Steam with their badges and level hoarding. But still, steam is harmless.
At least (from the video) it seems that you'd need to be at least a level 3 for the mass flagging, which comes after joining some workshops they give in level 2(?). For me, what's scary is them encouraging people to report more to get to level 1. I wouldn't have awarded points for that because its just too easy for trolls to do them mindlessly for points.
edit: adding more stuff:
Also, they get to talk directly to youtube staff? THEY get to talk directly to youtube staff? Not content creators? I'm sad... Very sad... Yea I said it twice to emphasize that point >.>"