I think vBulletin simply uses a forum category for reports, or maybe that was another forum software? At any rate, a forum doesn't cut it. Why? Because the Report Center has a variety of status's that weights the reports by how many reports a particular post has got, and how old the report is (all customizable). It also separates the actual reports from the comments. I've done the research and field testing to prove it.
To be quite honest, all moderator discussions should either be comments in a report, or comments under the user account through the warning panel. If an extensive discussion needs to take place regarding a particular member, then a topic could be created in the moderator forum (although I would suggest linking that topic to the user in the warning panel).
The idea behind the report center is to allow moderators to work together more efficiently. Downgrading to a forum would be going backwards.
I do agree that improvements should be made. For instance a search would be very useful. Keeping track of read/unread reports would be nice as well, although the status are really what's important - if something isn't marked completed, it should be. But for comments or new reports, I see how that can be needed. You can already customize what status's are considered "new" to be in the number. Adding the ability to rep moderators... Don't see the use in it myself.
One thing I think would be useful:
Show reports in line with the comments in the warning center. That way you could see what comments were made by a moderator about a particular member, and see topics/posts of theirs that was reported with the current status. Would give a moderator a more clearer "history" of a member. Perhaps when a moderator creates a topic regarding a particular member there could be a box to type in a member name to link that topic of discussion to the warning panel.
I *think* you can also make comments in the warning panel without adjusting the warning level as well, but I'm not sure.