I've never seen people flaubnt their karma or congratulate others on their karma here, and I have been on HN almost from day one. I've also been on the leader board at some time (when the board was introduced or was topic of discussion, may have been the only time when people where congratulated for their karma or position on the board).

These days I use throwaway accounts because of the increasing censorship and to force myself to ignore the karma system.

I think karma does affect the algorithm that decides if you get flagged or banned, or at least alerts the mods. May just be the short time votes on specific comments, though.