Yes, maybe instead of a 5 star system we really need:
* exceeds expectations
* met expectations
* did not meet expectations
And then just ding the folks in the last category.
Because what we have right now is really:
* 5 stars == exceeded or met expectations
* < 5 stars == did not meet expectations
However, it still won't address the issue of mutual rating. What you really need to do there is have the ratings hidden from each other until both have been submitted, and, frankly, not to penalize either side for ratings unless they are consistently negative. The latter is the only way to make them constructive rather than destructive.