I'd say exponential is better if we have a better distribution, but linear is better with the distribution we have.
Right now you have 1 pool for upvotes and downvotes. I'd suggesting making two pools. ideally you could delegate from either so you could give a trusted party the ability to downvote on your behalf just like you could delegate steem power now.
So would it work like, if you had 100 steem, you could delegate this to upvote AND downvote?
Ideally I could delegate 100 Up Power to @minnowsupport and delegate 100 Down Power to @steemcleaners from the same 100 Steem Power
That could encourage people more to flag bad content yeah, as it has no consequence on the earnings people might be able to abuse their power more. But on the other hand their cost would be the pool and their efforts.
One of the better alternatives I've read.