I tried to "play the tape through" on this, and imagine what it looks like. If Reddit had proactively tried to implement some kind of intervention system to remove abusive moderators from subreddits.
It puts Reddit as an organization in a tough position, because they have to mediate disputes. And it opens up a bunch of other questions. How big does a subreddit have to be before they qualify for this intervention system? Does one submit an organized case like filing a lawsuit? What if the accused moderator is the only moderator of the subreddit?
And what new rules does Reddit add to try to curb abusive moderators? There'd have to be some kind of ethical guidelines drawn up. So now unpaid moderators can be disbarred like lawyers?
Every thing I think of (admittedly not having spent a ton of time thinking about this) is open to potential abuse. Even if you set the trigger to be a 90% vote of "no confidence" by subscribed members of the subreddit, the subreddit would be vulnerable to "raids". If you gate it to "you have to have been subscribed for X amount of time" the time will either be too short and leave raiding or create a new "class" of "landed gentry" that have a disproportionate say in how the subreddit is run.
So I don't know if it's actually a failure. Some of the stuff Reddit did early on, things like vote fuzzing etc... show a willingness to experiment with using the platform itself to enforce better behavior. They might have been able to figure something out, eventually. But then I think of really simple stuff that even Hacker News has implemented (ex. you can't downvote a direct reply to one of your comments) and how Reddit doesn't have that.