I think that moderators are serving an important purpose. However, I would encourage them to use discretion whenever possible, and *always* give the user the benefit of the doubt.

They should act in cases where a post is clearly incorrectly posted, or where a thread has devolved to the point of providing no useful information (e.g. a flame war). The only other time they should act should be to consolidate threads -- as Burkey did so beautifully in the recent AA Gold Comp deluge.