Yes, it's not the flagging that bothers me. An inability to upload certain files the computer doesn't like is annoying at best. But the chance that they will go around humanly inspecting my files based on that? Dealbreaker.
Can you cite a source regarding the human involvement? I don't recall ever hearing about that. All the previous stories just indicated that the account shutdown was due to an automated scan.
And when the content gets flagged, what do you think happens next? Don't you think that, at some level, there will be a human involved?