In the end Reddit and Mods are co-dependent on each other. Mods use the platform provided by Reddit, but Reddit uses the voluntary work of mods to have a usable platform. Reddit could exchange all voluntary workers with paid mods, but I doubt something capital-intensive like that is what they planned for their pre-IPO strategy.
Somehow it never occurs to them that unmoderated platforms end up at best like 4chan and at worst like a site that gets shut down by the FBI.
I am sure they'll be terribly disappointed to be deprived of their... opportunity to work for free...
Frankly, the mods can just quit permanently. It’s an Internet forum, not life and death for them. There are so many other things that they could be doing with their time. Heck, I reckon it would be better for their mental and physical health in the long run if they quit doing internet janitor work and drop the perpetually online lifestyle - at least I believe that’s a requirement to effective moderate a fairly active subreddit.
Neither sounds like it would help achieve their profit goals.
As a side note: the brand is clearly on their mind, as they've made exceptions for disability features. Banning Redreader would have caused quite a bit more uproar.