Technology

On the other hand, it's a terrible system to have mods as unassailable tyrants.

Absolutely.

Unfortunately, I think the best system requires trusting site Admin to oversee and enforce things like code of conduct and standards. Setting up an external appeal mechanism of some sort. In Reddit's case, it would be a massive job and the company can't afford the staff to do that themselves, isn't trying, and has just tossed hands up and walked away from the problem entirely. They're not really to be trusted and the userbase knows that, so that's IMO why the site has never come up with a good solution to the issue.

Most other mechanisms have or create bigger problems than they directly solve, and no solution will prevent 100% of wrongful bans or abuses of power.

Open elections leave communities - especially small ones - open to being overwhelmed and hijacked, while even if that can be avoided tend to result in mods being unwilling to make any tough decision that might risk their popularity, while also pandering to populist interests within the community.

Closed elections (ie: community participation thresholds) can be gamed with a little more effort, but tend to have the opposite problem from above - you create a clique that runs the community, very similar to the existing problem with moderator teams who'll have each others' back no matter how shitty the others are.

Oversight boards are a moderately better solution, in that they remove the direct populism and much of the risk of community hijack, but there then runs the risk that the board(s) themselves get either hijacked, or rule on cases according to their own biases, putting slant on whole-site culture.