Yeah, I'm a little bit torn on the whole mod situation showing up here in this thread. We can dismiss them and pretend it's a non-issue all we want, but there has been a number of people coming here to express their distaste for the situation and ignoring that is ignoring a real thing that's going on. I can't speak for them, because I haven't been moderated in years (though a mod did approach me via PM recently), but I do sometimes feel almost... privileged. Like for some reason it doesn't really matter what I say, as long as I'm not being blatantly offensive I can get away with things other users don't seem to. Maybe that's just me, though.
No matter the mod team, mods and users will clash on 'what to do'. Even looking at the totality of this post, on one hand, you say the mods need to make changes, while also acknowledging the users that drive themselves to get moderated (being blatantly offensive puts yourself out there, but mods can't be everywhere at once and many people do not like to report). The answer to that is basically what it has always been — that no matter what changes are implemented, people will disagree with the authoritative side of things. That's not saying nothing can change/evolve/shift, but the clashing will happen.
I know the mods are likely to dismiss these concerns as just moaning from toxic members, and they may or may not be right, but I think there's a certain stubborness, maybe even arrogance, about the team at the moment. They're not really wrong to do what they do, after all the place does have rules. I've always been thankful to the work the mods put in on VGC, because it's what kept the place full of sensible and constructive people, but maybe now, with the reduced activity around and fewer new users, it could be the time to start reviewing those concepts and try to take a more lenient approach to moderations. It's clear that many members have been scared away by the nature of bans here, and funny enough, looking back at some of our oldest users still around, many of them haven't always had the most enviable behavior.
Some of this here also conflicts with itself. You say there's potentially an arrogance to the mods, but then don't really fault them for it. You also thank them for the work, but say they need to be more lenient. For my part, since joining the mods (and relative to my join date in August 2008), I feel we let a lot more go on than past teams would have (discussions like these ~ where the mods were put under microscopes ~ wouldn't have lasted, for example). They just didn't put up with stuff. Back talk? Forget about it. You saw very little in the early years.
On the flipside, we do hone in on things like 'fanboy' or 'troll' (something teams of the past would have let slide — particularly prior to the big site change of 2010).
In the same breath, while we can always improve, without naming names, some of the site's most toxic users (by community/mod feedback), have been removed by this mod team. Of course we are far from perfect, but we are trying to correct issues (as a whole, not just from this particular team).
Maybe we could introduce new ways of moderation? Something that drives people to be more constructive and less toxic, without driving them away? For example, say instead of there being warnings and bans, there's something in between, like a half-ban or something, where the person isn't allowed to do certain actions for a while but can still come around and discuss the matters of their moderation or whatever.
Although I can't speak for what went on before I got on the team, when I joined, I pushed for PMs before Warnings. I'm not sure if it has been a major success, but I believe it has done some good. We're still working on a few universal tools to better assist with moderating, but this suggestion helps keep ideas going. There are a few past mods that I aim to take pointers from while I'm here (makingmusic, Miguel, Smeags, Torillian, and twesterm as the main ones).
All-in-all, thank you for your cordial approach to this, regardless of what I agree/disagree with.