Ability to give positive feedback?

First of all, it doesn't matter how often someone is reported by any number of people.

If thousands of people report your Realm admin, those thousand reports get consolidated into one single report (so the Enforcement team has to look at one consolidated report instead of thousands).

The only thing that happens when more people report is that the report is advanced faster in the reporting queue and is seen earlier by a real life human being from the enforcement team.

Then the evidence that each report generates is reviewed. Every time someone sends in a report, the consoles involved collect data and telemetry and send that in along with the report. This evidence is then reviewed by the person from the enforcement team.

If there is no sign of a breach of the Code of Conduct, nothing will happen to your realm admin. No matter how many people report him. On the contrary: Every person that falsely reported your realm admin will get a lower trust score, and their reports will
then wait longer in the review queue.

However, if the evidence in the reports show a violation of the Code of Conduct, the Enforcement Team has to act and will issue a suspension.

If your Realm Admin thinks that the suspension was made in error, he will have to go to
https://enforcement.xbox.com and file a case review.

There he can add an explanation why he thinks the ban was made in error. That report is then attached to the original suspension and a real life person then reviews the case again.

If they find that the suspension was made in error, they will lift it. If the explanation from the realm owner couldn't disprove the evidence, the suspension will stand.

As for your requirement that people shouldn't be locked out of something they paid for, take this real world example:

Imagine you're going to the cinema. You pay for your ticket, and take your seat. As soon as the movie starts, you start screaming, and yelling obscenities, throwing popcorn at other people and behave badly.

Even though you paid for your seat in the movie theater, the owner of the cinema can then remove you from the building.

The same is with Minecraft Realms and the Xbox Live service. Microsoft created their private place where they invite people to have fun together. However, before you get in, they show you the Code of Conduct and Terms of Use that you agree upon. And in those
rules it states, if you break those rules, Microsoft reserves the right to suspend you from their services.

So even if your realm owner pays for his realm: If he broke the rules, he has forfeit his rights to access his realm.

The feedback and reputation system would have the information included on how to leave feedback for a player. That is the only way to leave feedback for another player. Only the person who has been suspended can contact the enforcement team to try
to have their suspension uplifted. There is no way for anyone else to contact the enforcement team on their behalf.

Okay, please note that this is exactly the problem. I know how to leave feedback, a second explanation was not necessary. Please understand that I am cognizant of how the system works.

What I am trying to get you to understand is that there is no way this current system will ever reward a positive player. The only action ever taken is against negative feedback, with no ability to weigh that against prior positive notes. I personally
have had an account now for over 15 years, and have made actual real life friends through playing games together.

If a person really didn't like me for whatever reason, all it would take is a few negative comments to get my account shut down permanently. As in, the 15 years of positive playing could be undone in one day. Let's pretend I am having a bad day, and let
slip a comment that another player finds offensive (I know, try and pretend this happens, ha ha). Two negative feedback comments later, and I am out an account 15 years old. You cannot state that this has never happened, I have online friends that have has
this exact scenario play out just like this. At no point were any of their actual friends allowed to weigh into the situation, and point out that the complaints were completely unfounded.

Currently, the Realm I play in seems to attract people who simply do not want to play by the community rules, and get banned from the server. This has led to the server owner being suspended for 2 days. Please explain the justice behind this move. He
never communicated to these people in a foul manner, in fact, once banned they are no longer allowed in the Discord chat at all. So, how did this happen?

I realize that a retool of the feedback system isn't going to be an overnight fix, and will require work. You have been making plenty of income from this system, and it is time to pay some of that back. Knee-jerk suspensions are not going to cut it in
this complicated social structure that you (as in Microsoft) has created. You have made an online community, now it's time to start putting in the work.

Rep has nothing to do with suspensions. In your scenario yes a person could get angry and submit negative feedback, but you would not lose your account over it. You can also receive a permanent ban for somewhing while having never received negative feedback.
The enforcement team looks at conplaints they have received and will investigate those complaints and only issue a suspension if they find you have done something to violate the code of conduct. The server owner would not have been suspended for banning people
from his realm. The suspension could be for something completely unrelated to that game. Only the enforcement team knows why they were suspended. Investigations can take time so the suspension could actually be for something that took place days before the
server owner banned the other people.

You can post any suggestions here. https://www.reddit.com/r/xboxinsiders/wiki/ideas

It takes more than " a few negative comments to get my account shut down permanently. ", each complaint is looked at individually and deemed to be valid or not.

Please explain the justice behind this move. He never communicated to these people in a foul manner, in fact, once banned they are no longer allowed in the Discord chat at all. So, how did this happen?

Xbox doesn't comm ban you for actions taken on Discord servers. They have nothing to do with your group's Discord.