It's good to have an option for the "something is going on here that probably shouldn't, a human moderator should take a closer look" case, even if it's not needed that often. I've used it on some spammers and an occasional drive-by gibberish trolling.

Calling it "flag" instead of "report" would help with the confusion with "reply", but on the other hand it's less clear what "flag" means. Since most users can safely ignore the option anyway, this is probably a smaller problem than confusion with "reply", so supporting this one.