I agree with your assessments and lemmy definitely has a major issue with mods abusing their power "because they can."
The answer is to create new instances that don't allow abuses of power. We shouldn't be afraid of being 'defederated' from the abusive instances. Eventually, they will have their own echo chamber while the rest of us can converse without fear of censorship.
"They're a business and they need to make money." - useful idiots