Ok. Vote out the moderators and then what? Obviously the community can't go unmoderated, so where does the power go?

There's only two ways this goes:

• Voting out moderators turns into voting for moderators. Turning moderation into public office turns moderators into politicians.
• Voting out moderators turns into surrendering control to Reddit admins. Small subreddits will be ignored and turned into unmoderated ditches while big subreddits will be converted into puppets.