I see firing in such a case as a cop-out, a cowardly way to appease mob-mentality.

In this case if the employee responsible for firing the moderator did such acts repeatedly despite management warnings than perhaps it's a good idea to fire that person. However this doesn't seem to be the case, the CTO correctly assumed responsibility in his apology of green-lighting the moderator's firing.

He does the right thing, in my opinion, by promising a better process that wouldn't lead to such a hurtful (and seemingly unfair) dismissal.

You don't fire an employee for mistakenly deleting your production database, you update your process so this cannot happen (at least not by accident).