Then you're failing to look past yourself to the larger psychological impact. This is the carrot to the stick (reports). Many studies show that positive reinforcement is far more effective than negative. If this promotes less people raging in game then it is a success.
the psychological impact is that it creates an environment where people are more willing to play because they are less afraid of being raged on and verbally abused if they play badly
it doesn't necessarily mean that they will start playing better though
if there is no one that calls them out on doing something poorly or stupid, it can take a while for them to ever start learning what they are doing wrong. if they are thick headed and have too much of an ego, they might not ever learn
some people can focus mainly on the fun part of playing a game and tolerate skill gaps. for other people, part of the fun is playing to get better individually and as a team, but that fun becomes more limited if a team member becomes too heavy to carry on a team
in terms of honor versus reports, I've read that if you get punished for tribunal cases against you, honor is wiped.