Slashdot solved that problem over a decade ago. Semi-Random users receive moderation powers and can assign a post to several categories (Flame-bait, Troll, Funny, Redundant, Insightful, Informative). Any other user has the power to review moderator choices. Get enough negative feedback and you lose the chance to be chosen as moderator in the future.
You also cannot moderate and participate in the same conversation. Posting a comment revokes any moderation in the thread.
You can change your user preferences to augment the moderation choices, such as -5 to funny and +3 to insightful.
The can't-mod/post-simultaneously rule is super annoying though, and I wish it were at least a bit more subtle. For instance, maybe something like "can't mod the same sub-thread you've posted in" or whatever (to stop people from modding down their opponent in an argument).
You also cannot moderate and participate in the same conversation. Posting a comment revokes any moderation in the thread.
You can change your user preferences to augment the moderation choices, such as -5 to funny and +3 to insightful.
CmdrTaco provides history on how the system evolved: http://slashdot.org/moderation.shtml (1999)