I know this is an incredibly divisive topic and I don't envy the position this puts admin in. For what it's worth, I appreciate that you're trying to make it work and involving the community in the process.
Downvotes are a useful tool to shape a community and help with moderation, but with the size of the active posting population as well as the broad reach for posts across the greater Fediverse downvotes don't lend well to fostering the human element. It's fine to have them with a larger active community where people can form their own content bubbles, but pretty much anything that's posted here ends up at the top of local for a few hours and is going to get a lot of eyes on it that may not enjoy the premise of the community. You'll have no posts to downvote after the community has chased away anyone who posts though.
With Yiffit, pornlemmy, and now Lemmyf.uk all shut down this is the only dedicated nsfw instance left that I'm aware of. It honestly just seems like Lemmy in general is hostile to nsfw content.
Reports just trigger a mod or admin to review the post when they see it. Reports do not affect the ranking of a post in any way unless moderator action is taken and it's removed.