You do it as your reading a thread. For example, if you like this answer, you can click the "commend" link above my picture there on the left. You can commend or defame again and again, but to prevent people from going crazy and boosting reputation too fast, there is a limit on how many points you can give to a person (ie - 1 time per hour per recipient - though that number can change depending on how this gets used - maybe once per day is more appropriate).
It's not scaled at all. Someone could have a reputation of 5 or 10 or 10,000, or they could have a negative reputation.
Banning people will probably never become a common practice. On the internet, you can't actually ban people, just cookies and IP addresses, and there are always ways around the ban.
What do you all think of the names? Should it be called "reputation" or something else? "karma?" I'd like to use a legal theme (hence: defame), but is it clear enough?