Don't read my answer until you read Ana's. She answered perfectly and this is minor commentary.
After some investigation, I found the chat item. It's an animated GIF (also available in this answer) that is mildly disturbing the first time through and exponentially annoying the next N times you can stand to watch it. Flagging is definitely called for and not because of a little blood or off-screen violence. It's obvious the film maker staged the scene to make viewers anxious. There's no reason to subject other users of chat to unsettling images like this. (Doubly so since humans are attuned to movement. Animated GIFs draw far more attention to themselves than static images.)
Context matters, of course:
This chick blew up like she ate TNT.
Well the real context was discussion of an the question I linked to above. Talking about a post on the site is obviously exactly the sort of thing we want chat to be all about. I don't know if the animated GIF helps the answer itself, but in chat it's gratuitous. Maybe you enjoy seeing the scene fragment looped forever, but nobody should be surprised if other people are uncomfortable with it dominating the chatroom for however long it takes to be deleted or scroll out of view.
Is this "personal taste"? Sure. But it's a personal taste shared by several other users besides whoever flagged it. And this is exactly the sort of information that the flag system is designed to gather. There's no point in trying to frame it as some sort of objective ratings standard; flagging works on the principles of the Stewart test. So we should certainly encourage people to flag when they find something offensive.
The associated suspension seems to be the part that annoys folks the most about chat flags. I'm not going to argue that chat suspensions are perfect. They are intended to serve a similar function our main site suspensions:
[Disruptive] behaviors have to be dealt with. When they aren't, it takes up excessive moderator time that could be used for something more productive—and, even worse, these behaviors begin to actively turn people away from our community, stunting its growth and harming everyone.
Automatic chat suspensions cost one user 30 minutes of time they could potentially be using to participate on chat. Sadly Mos Eisley (as well as a select few other rooms) tends to take many times as many person-hours discussing the suspension, the flags that initiated it, and the system itself. Instead of spending their time doing something productive (such as answering questions on the site or income taxes or something) people just love to stir up drama instead.
So we should get rid of automatic suspensions, right? Not so fast, partner. There needs to be some way to signal to the person who wrote the chat item that the community (or at least a subset of it) did not appreciate it. In our experience, nothing communicates quite like a suspension. The real problem I see is that automatic suspensions delay the communication. You can flirt with the the line of acceptable behavior for hours and annoy people who don't flag for fear of being a bigger jerk who gets you suspended. Eventually, you cross the line, get flagged and suspended, and it feels incredibly unjust.
I don't have any solutions. But I would like to suggest that people stop focusing on problem flagging and start focusing on problem chatting. The current state of affairs is like people in a burning building complaining about the smoke detectors instead of calling the fire department.