I'd base the "default" setting on the business decision whether you want to maximize the ads shown or minimize your risk. If you want to maximize the ads shown, show them when an image is in (undecided,clean), otherwise, only show ads when an image is clean.

Based on the same risk/gain assessment, I'd modify the decision for the hierarchy of flags. For the "pure clean" approach, any contesting flag marks the image as "unclean".

I wouldn't let the users contest the porn-opinion of the contest owners and authors. This could be abused by authors tagging all their images as "porn" to subvert ads being shown together with their images, but this could also be abused by users by tagging everything as "porn" to move images into the "unclean" state. I think the risk of authors not wanting ads weighs less than the risk of (anonymous?) users tagging everything as porn.