I've been a forum admin and forum moderator in the past and yes there's always a risk of people going rogue or power-tripping, but that can happen with literally anyone. If it happens, it also tends to end very rapidly as the other moderators clean-up the actions of the rogue quickly. That's why you vet people based off their history and hope it works out. In my experience it's better to have a larger group of trusted moderators to maintain a balance of power then for a small group to act in an authoritarian manner; the latter of which seems to be the case here.
If there's a perception of a witch hunt then the moderator action of ultimate banishment only fuels that fire, seems counter-intuitive for people supposedly acting in good faith.
EDIT: Clarified statement on paid mods
As far as what happened here the moderator for /r/interestingasfuck has been talking about it. He seems pretty open to answer questions. Maybe he could be asked if he gets paid to moderate?
I mean, having lots of big subs under your control definitely does give you a little feeling of power, which some people like. Personally it doesn't outweigh the responsibilities, which is why my subs are <10k.
>I'm sure there's no shortage of people willing to help moderate
Probably true. But with every new mod you run the risk of getting one who goes rogue or otherwise _seriously_ abuses power. This is simply a self-fulfilling prophecy:
1. conspiracy that a small network of mods have censorship power*
2. mods censor posts because it inevitably leads to a witchhunt
3. goto 1
*mods do have basically unchecked power in subreddits, so it's not really a conspiracy. For a very long time, /r/xkcd was squatted on by white nationalists and admins refused to step in for months.