But now you have to subtract from the "plenty of people" those who are angered and disillusioned over Reddit's treatment of existing community mods and power users. You're whittling down the population of people who actually care about the subreddits they moderate and contribute to. So yeah, you could get them moderated, but the site would mostly go to garbage.

Reddit's triumph from the user perspective is that all of the content is driven by users, and those users are primarily made up of a small and passionate minority. The downfall of this fact from the business side is that Reddit as a company needs to appease those people because without their contributions, nobody would want to use the site.

The truth is that there are many, many niche communities where this is simply not true. Whole sections of reddit will die off due to lack of moderation and people will be forced to go elsewhere. This may not be a killing blow for reddit, but it will be devastating to the communities that it impacts.