In my view, "moderation points" are censorship. Moderation points are censorship where the rules are even less clear than Reddit's. The rules for what's allowed are always changing, and no site has come up with a way to handle moderation point assignment in a way that is clearly distinguishable from capricious censorship.
What's legal strikes me as besides the point; the Internet is global so what's legal in one regime might be illegal in another. But since Reddit (and Hacker News, for all I know) are hosted in the US, it's worth pointing out that freedom of speech is trampled on in the US ("Defending Pornography" does a very good job of discussing how American law has double standards with sexually-related speech, for example, by offering censorship in ways Americans would not tolerate for nonsexual speech). Private organizations (such as Reddit, Hacker News, etc.) have no obligation to honor freedom of speech, they're allowed to be remarkably censorious. So whether state-based or private but hosted in the US, free speech is always met with some reaction like "I believe in freedom of speech but there ought to be limits..." and then we're off to learn where the limits are with this person, that topic, or this minute.