Looking at /r/all today, it seems like there's still enough big front-page subs with mods to at least temporarily reallocate responsibilities. Most of the big subs are controlled by "power mods" already who administrate many subs. I think there would absolutely be a significant longer term loss of quality, but my guess is that in the shorter term Reddit could just give the keys to those subs to the 'power mods' who have remained.

I think you'd be surprised. Nature abhors a vacuum and there will be many users waiting in the wings for the tiny internet power of that prestigious mod hat.