Peer review is a painful process both to authors and to referees, and I gather from Eilon’s post that editors are not thrilled with it either. This, I believe, is in part because we game theorists expect the referee not only to judge the paper, but also to discuss the paper more than is necessary to justify the judgment, and, even worse, to suggest ways to improve the paper.
This is why we produce long reports, sometimes of low quality because we force ourselves to write something even when we have nothing valuable to say. Sure, the referee’s feedback can be useful — As Eilon says, some authors believe that it is actually worth the delay in publication even when the paper is bound to be rejected. But even in these cases I think the effort to write the report is not worth the small audience that the report will receive. If the referee has some interesting observation or criticism about the paper, why hide it from the rest of community ?
you are not expected to rewrite the paper or to suggest major revisions or avenues for further research. Your role is simply to recommend whether or not the paper should be published.