Powertripping mods have
always been a problem with Reddit ever since they had user-created subreddits. The real problem is that Reddit has been very two-faced with what their expectations on moderators are. If we take "the purpose of a system is what it does[0]" then Reddit moderators exist primarily as unpaid volunteer employees, paid in control over the narrative of certain communities.
The flipside of powertripping mods is that Reddit does not support their moderation teams properly. Actually, that big stink people made over killing third-party Reddit client access was all powermods, because doing your job as a moderator is nigh-impossible with the standard Reddit tools. That's why we had so many subs get blacked out in protest, and why Reddit's response was to start deposing moderators until they caved.
As an example of what I mean by "do not support moderation teams", Reddit still has no good tools to prevent brigading. That is, the vaccination subs that want to talk about vaccines have no tools to prevent people from the antivax subs from coming in and changing the narrative by downvoting everything vaccine positive[1]. You generally can't stop someone from voting in your subreddit. But if they comment, you can scrutinize their post history and ban them from commenting if they're from the other sub that's brigading you.
There's also that video[2] that did the rounds a while ago of a Reddit mod trying to explain how them promoting a scam is really Reddit's fault for not paying mods. Despite the fact that this person is incredibly cringe, I actually do think he's grasping at an actual problem - it's just not one that exonerates him in any way. Reddit wants it both ways, and as a result, they get the worst people.
And they've been doing this since they were a start-up. Remember when one of Reddit's most popular subs was /r/jailbait, a forum dedicated to trading suggestive pictures of young women around? That forum was kept around because its top mod, /u/violentacrez, was doing basically all of Reddit's CSAM compliance. That's the business model of Reddit in a nutshell: find the scummiest people who are still capable of doing the job and give them total power over their domain so they don't question the lack of pay. The IPO was only tangentially related to this, in that it's when a lot of less power-trippy mods jumped ship.
[0] This is a big part of systems theory but it equally applies to critical theory
[1] The pattern is generally always "small group of people holding heretical opinions joins forum with orthodox opinion to agendapost", I've never seen the other way around - i.e. I haven't seen militantly "pro-vax" people going on anti-vaxxer subs to downvote everything.
[1] https://youtu.be/67CXV4o4dYM