Alright, chiming in a little late (finals and final projects do that to you

).
Good discussion so far, and I think I can go along with the FlyerTalk method. My thoughts:
Requirements for being a mod:-
Contributed to the benefit of GMATClub: This is a hard one to determine, but it could be either a vote by the general members, or have Praetorian + board of directors decide, or some combination? The key is to not just base it off posts. Kudos may work, though different people give kudos differently, so until you reach a certain number (maybe over 100?), it's not a reliable counter.
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Be Nice: The key tenet of GMATClub. The moderator should always keep a cool head and moderate any conflicts as best as he/she could. If the moderator loses his/her cool once or twice, that's fine. But repeated offenses should not be tolerated. Personally, I think this is one of the most important aspects of being a moderator, since new members to GMATClub look at the different colored names as examples to follow. If any moderators behave badly, that will only disrupt the culture of GMATClub that most of us spent so much time protecting.
Identifying Marks:I like the current system. Maybe keep green for "current applicant mods" and make a new color for "current student/gradudated MBA mods". This way we have red for Praetorian, blue for BOD, green for current applicant mods, and maybe orange or yellow for "graduated mods"?
As for school identification, is there any way to add a "custom title" area only for mods where you can put a special school logo or school name to identify where you're attending or where you graduated from?
Numbers:I would agree that we probably should have a soft limit of how many current mods we have. I don't know what the best number is, but maybe 10-15? Of course, if some superstar contributor comes along, the "soft limit" will allow us to add that person as a mod, but limiting the numbers will help keep the mod status "special" and recognize individuals for their good contribution to the site.
Mod Board:This is a useful thing to add. In other forums where I'm a mod, we use the board to discuss problematic people and come to a consensus of sorts on how to deal with the person. This will prevent problems like one mod removing messages or banning someone and the other mod reversing the decision. Those sorts of "conflicts" just add to confusion and show that the mod group is disorganized to the outside world.
Duties:- Lead by example: BE NICE and RESPECTFUL!
- Make sure all the posts are "nice"
- report to Praet or whomever the new "board decision makers" are if any member is problematic (e.g. if "rankingsgod10" came to GMATClub) for disciplinary action
- facilitate discussion and moderate conflicts between members
- Sort information so it's easier for current and future members to find (i.e. Member Profiles, Essay Vaults, Knowledge Vaults, Ambassadors, "Who Got In" Threads, etc...)
Hope my $2 was useful.