@Fate I don't think it's my job to report, but it does help make this a better environment for all of us. It only takes a couple of seconds to report something, so I look at it as volunteering for a better Etsy community :)
I def do report obvious violations on TOU. But, I know the Etsy staff is so bogged down with reports it might be more helpful to follow sites like
http://etsycallout.wordpress.com/ That way lots of people are reporting the same shop, and they will be reviewed faster.