Currently, the way that chat moderation is set up, it relies heavily on site moderators moderating chat in addition to their main Q&A site. Moderators have some pretty powerful tools (freezing rooms, suspensions), and rooms also have a first line of defense in the form of room owners, who have smaller tools than the mods, but useful ones at any rate (kicks, timeouts).
As someone who spends (spent?) a lot of time in chat, with a hand in moderating it - I was a fairly active moderator on chat.SE when I had my diamond, and I am also currently a room owner in the Tavern on the Meta on chat.Meta and the Meta Stack Overflow room on chat.SO - I have some experience with how this system works in different contexts.
And... basically? It doesn't.
When there aren't any moderators around and the room has to rely on the room owners alone - like the Tavern for most of its history - the tools that the room owners have simply aren't powerful enough. Sure, you can keep kicking someone from one room, but there is no way to stop them from then going into another room, or creating their own, and causing trouble there. A room owner's capabilities are limited to a single room, and they don't have any way of dealing with an issue that escapes that room.
When there are too many moderators, like the Teachers' Lounge, it also becomes impossible - since there is no way to moderate the moderators, any problem will simply keep devolving since there's no way for anyone to step in forcefully.
Now, all of these problems, I believe, stem from one main issue: We expect the diamond moderators to moderate chat.
Now, at a certain level, this makes sense. They are the people we elected / appointed to moderate the main sites, and chat is an extension of the main site. It makes sense to have the same people in charge of moderation.
However, this doesn't work. The site moderators have been elected / appointed for their skill in moderating a Q&A site. The skills required for effectively moderating a Q&A site are, if not totally different, largely different from the skills needed to moderate a chat room / server. It's a different skillset to moderate a live chat vs a Q&A site. Some of the moderators on the sites have those skills. Others... don't.
A lot of moderators don't use chat in the first place. They are not required to use chat and shouldn't be required to use it. We therefore cannot depend solely on these site moderators to moderate chat, because they have no responsibility to do so, may not have the skills needed to do so, and that is not what we ask of moderators when we elect / appoint them. There are also too many moderators, to the point where they occasionally need moderation themselves.
So, to solve these issues, I suggest appointing or electing designated chat moderators. These chat moderators would be a step above diamond moderators and be able to moderate the diamond moderators themselves, including the Teachers' Lounge. A chat moderator would be able to suspend or kick a diamond moderator, and have an option akin to freezing that would work on moderators as well.
These chat moderators would need to be people who are able to effectively moderate chat, not the main sites. Aside from the extra abilities to moderate the moderators, these chat moderators would also have all of the current capabilities that diamond moderators and room owners have, and to have them across all of chat.SE, chat.Meta, and chat.SO.
(This might mean that per-site moderation rooms - such as on MSE or SO - would need to be adjusted to only allow the site moderators in. Chat moderators should not have access to the site-specific private rooms. Whether or not they should have access to other site-hosted private rooms (as opposed to de-parented rooms like the TL and Good Subjective) is something I'm not sure about.)
This way, the hierarchy of chat moderation would go: regular users (who can flag / mod flag) > 10k users (who can vote on flags) > room owners (who can kick, timeout, move messages etc in their room) > diamond moderators (who can suspend, delete messages, freeze / delete rooms etc across the server) > chat moderators (who have all of the capabilities of moderators and room owners across all three chat servers) > staff.
This would both solve the problem of there being no way to moderate the moderators and solve the issue of relying on site moderators to moderate chat as well.
