You aren't seeing reports working for 2 reasons: 1) The current report system is a royal pain to use so most people either just ignore or blacklist and never bother to spend the time to report them (seriously, if it takes even 2 minutes to report them then it only takes 15 messages to waste a half hour of your time, and you can get more than that in a shorter span of time). 2) The investigation processes SE uses doesn't target the sellers but the 'bank' characters, so it takes longer for things to get done since they have to track them down.
This option would actually go a long way to solve the problem. When it takes just as long to report and block an RMT as it does for them to shout/tell their ads, then more people will report and more accounts will be tracked down. When LotRO launched the RMT spam was horrendous, a month later they introduced the 'Report as gold seller' option on right click and within a few months... blissful peace and quiet, so it does work... If it's done right.