"I can't say I care much for your option 2 because it's open to abuse. I know for a damn fact I'd abuse it, even though I believe myself to be a basically fair and reasonable person."

I pretty much agree with that.  It would probably lead to a new level of silliness - you put one of mine in the hospital, I'll put two of yours in the morgue etc., with the moderators having to referee even more. Giving the moderators thread blocking capability might be good.

"Democracy is a pathetic belief in the collective wisdom of individual ignorance." - H. L. Mencken