Couldn't have said it better Star.
Long educational post is ftw. Can't agree more on the part of nuzzling friends and biting enemies. I've seen it happen a lot myself on other forums, especially on ProBoards where you can actually see who exalts/smites someone. It's definitely not what karma should be used for, although people still do it [I'm not referring to this site specifically]. Well, the exact opposite. From what I've seen, often, people who serve others, in many different ways like drawing for them or something like that, get a lot of karma. On the other hand, people who are actually being helpful and provide information, as well as pointing out the flaws in an opinion, rather receive bites than nuzzles, simply because some people cannot get over themselves and admit someone else is right apart themselves.
I think just this reason is enough to get rid of karma. Really, it does not do much other than just stroking people's egos, like it has been pointed out already.