But when the victims are willing and enthusiastic participants, who would complain bitterly if they were barred from contributing their free labor, what are you supposed to do?

Their free labor is compensated by something else, probably status or power, obviously, so it's not clear that anyone is being taken advantage of.

This common argument seems like a misunderstanding of how Reddit works. Mods aren't unpaid workers for Reddit, but rather, mods get access to a free platform to create a community on the condition that it follows the rules. That's the compensation. In contrast, one of the forums I'm active on just did a donation run to keep their servers running for another year.