Q: Can this tool be used if I'm worried about "negative SEO"?
[Reiteration of tools primary purpose]
In general, Google works hard to prevent other webmasters from being able to harm your ranking. However, if you're worried that some backlinks might be affecting your site's reputation, you can use the Disavow Links tool to indicate to Google that those links should be ignored. Again, we build our algorithms with an eye to preventing negative SEO, so the vast majority of webmasters don't need to worry about negative SEO at all.
I think the main thrust of the blog post is "Don't think you can kid us that your manipulative practices are negative SEO. Everyone says that, and the numbers just don't back that up"
And yes, of course Google will use the data. If it were me, and a domain (or subdomain, or pagegroup) was frequently disavowed, I would take that as a strong hint that I should be investigating that entity as a link seller. And if several entities were frequently cited together, I would investigate a link scheme or hidden ownership structures etc.
Finally, I would be using the data from the flagged sites (the submitters) and combine it with the files to refine my "spam" (or potentially "negative SEO") footprint profile.