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Except he doesn't say how reputation would be used, just a vague "consensus"...

Reputation is gameable. I believe that one 100% upvote from a user like blocktrades can take a brand new user from reputation 25 to 55+.

If reputation can not fullfil its purpose then we have a problem.
I believe reputation on steem needs to be redefined entirely.

It was really designed with a specific purpose in mind - as a tool to combat spam. If it was going to be used for something like you are proposing, you are correct - it would need to be redesigned. A redesign of the reputation system is a pretty large task in of itself. Not necessarily a bad idea, but it would be a lot of work.

How does it combat spam?

By hiding content from users with a negative rep. It isn't perfect at what it does, but it does do a decent job at preventing/discouraging/hiding some of the low level abuse.

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