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People don't get banned for "no reason" and usually the players who claim such just have their accounts associated with someone else (through transferring accounts that they owned to other people, logging on other people's accounts, etc).
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It might seem that they get banned suddenly and for 'no reason' due to lack of attention in this area on a daily basis. The approach of an event such as this might make a little more vigilance on the part of GP's or higher ups necessary, along with a more strict interpretation of the rules.
Can't think of one time that I have seen the 'report' button in game have any effect but giving some of the less savory characters in the game world a good chuckle. Not to say that it doesn't do anything, but the visible results just are not there most of the time.