Like the warm and fuzzy part, not sure if it can be properly implemented given the usual demographics.
For a start, why should only the winning team gets it? I can see a game where it is 3v5, but the disadvantaged team managed to play so well that they almost won, but did not. In an ideal world, all the players should recognise and respect the performance of those players, and praise/reward as appropriate. In reality, well, I am sure we've all been there and know what usually happens.
If someone is to be rewarded, I think it should be based on performance over a period. So, instead of /report, maybe implement a /recommend option. Once there are enough recommendations, they get sent to Tribunal, who makes a decision to reward or to ignore. The reward may be a small IP bonus or a free 1 or 5 or 10-game IP boost. I think this is a bit more objective.
Also, what about rewards in the following ways:
1. If you get a certain number of reward decisions (say, 5) from the Tribunal, you get a halo or plus or some such special symbols next to your summoner's profile.
2. Riot can publish a list of players with these special symbols on their website, for some extra warm and fuzzy feelings. Also, it allows other players to add them as friends and play with them.
3. Matchmaking system is changed so that if you have achieved the status, then you are more likely to be matched with other players who has also achieved the same status.
4. Obviously, there needs to be a system where you can lose the status if you end up being naughty. This isn't hard to implement.