If it were flagged shouldn't the post itself read as (dead flagged)? That's been my experience with articles that were flagged off the front page.
I'm not seeing that here.
No, there's a middle ground where a post is simply de-ranked. Which, absolutely, makes it hard to tell what happened as an outsider. IIRC, basically a "flag" also counts as a bunch of downvotes, in addition to adding up to a threshold where it actually marks a post as "flagged".
Given the clear conflict of interest at play here (Reddit is a YC company and are seemingly preparing to IPO in the near future) this post would be a great candidate for additional transparency from dang
Now it's fully flagged, and I think the information you just stated means it will stay that way.