> Because the event is private, the relay must rely on Reports (or Deletion events) from the author of the p-Tag that the GiftWrap is sent to.

Wait ... so these events are sent to identified pubkeys? What if the recipient's client can't decrypt the event ... cause it's just garbage? Who's going to report this spam?

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> these events are sent to identified pubkeys?

On the most basic version, yes. Clients can use aliases as well if they want additional privacy. And those aliases can also be independently registered with relays or simply used to write Spam reports or deletion events.

> What if the recipient's client can't decrypt the event

It doesn't matter if they can or cannot decrypt. If they are listed as a pTag, they are the only interested party in the event. If they are reporting spam, it is spam and can be deleted.