Hey Veer, nice to see you again. And yikes! Yeah. This used to happen with the vBulletin forum as well. Once the blog reply option was available the post replies became blog replies. I turned that off rather quickly.
One thing you can do is tell the user that they are accidentally using the "report" rather than the "reply" feature. Educate them, to prevent them from doing so again.
Another option is perhaps to Make the reply link marked up, so it stands out more. A blue background and blue border for example. And make the "report" link a grey, so it's more text and people scan over it more easily.
Finally you could perhaps make multiple usergroups. Users with low amount of posts perhaps shouldn't have the report permission, but as an additional privilege to those who have been around the board, you could give them the report option.
1.1 of XenForo supports user promotions. You could create one based on registration date & amount of posts. To auto upgrade them to this more advanced usergroup.