You basically need people willing to donate lots of their time to read new on a specific subreddit constantly (there is a reason (in a consequentialist sense) mods tend to enforce their opinion on every post, it's cause they spend hours reading every single one already, and the kind of person willing to do that probably has some (obsessive) opinions).
There are some subreddits where you can be a mod and you get pinged and you make decision, and so you can spend your time doing other things and still help, but they are very small. And there are some tools that let you take the "and I get pinged and I make a decision" up to the larger subreddit scale, and tools which make reading new easier to do... these are the tools reddit is going to get rid of / make pay only.
So yea, it's going to be even harder to find some poor schmuck with no life willing to donate a bunch of their free time to create high quality subreddits that comply with the admin's rules (which is actually what a lot of "do whatever you want" mods end up spending most of their time dealing with). And the people they do find are going to have even stronger personal influences on subreddits than the current ones do.
Yes. Moderating a large sub is a ton of work with no compensation whatsoever.
The biggest sub I mod recently grew to ~10k users, it's German speaking, and covers a pretty niche topic.
That sub alone is already a surprising amount of work, and 10k is absolutely tiny.
Automod alone removes 4-5 posts a day, and there's still quite a lot of bot generated, irrelevant, or spammy posts and comments that manage to bypass the filters. I can't imagine the amount of spam that would flow in at a subreddit hundreds of times larger than that.
For major subs, absolutely. Take /r/videos for example. What's to stop bots from uploading porn to /r/videos at breakneck pace? You need a small army of moderators to close the floodgates. It might not happen immediately, but eventually, there will be massive spam submitted to default subreddits with new moderators.
Moderation takes time and unless Reddit is going to pony up $$$ to pay mods to sweep in on short notice, then I suspect people who casually volunteer will quickly be overwhelmed.
