If two minnows with equal voting power each vote on two posts (with no other votes cast), then those two posts will each receive 50% of the reward pool.

So, flags aren't needed for "guiding the reward pool" at all. Just up vote where you think a reward should go.

That is not a valid conclusion (IMO).

Let's say you have 20 minnows. 10 of them each vote for 10 unique posts that they think are awesome, and 10 of them collude together to upvote a 'crap post' and split the rewards. My math may be a tiny bit off, but I believe that the post that got 10 votes would get 90% of the rewards, and the other 10 posts would get 1% each.

If a dolphin thought that was unfair, it could downvote the 'crap post', and then the remaining 10 posts would each get 10%.