Sure, behaving honorably in the past doesn't preclude the possibility of scamming in the future. All other things being equal though, i'd still bet on someone who hasn't scammed before than an established scammer.
True, but you're more likely to get scammed BIG by someone who was previously trusted, because you simply wouldn't trust someone for a lot of money without some reputational background. A good con artist knows to build a reputation before the big score.
You do have a point -- if we have cops, we become less vigilant in protecting ourselves. I simply don't see it as a strong argument for getting rid of cops altogether.
Even if you feel that the scammer labels/negative trust have 50/50 chance of being rigged, you should still avoid trading with tagged users if non-tagged users are available. Not necessarily fair, simply statistically sound.
*There are possible scenarios in which this doesn't hold true, but those are pretty contrived.