1. The overwhelming majority of people you're talking about were, objectively, not moderators, and calling them that betrays an unwillingness to engage with the community on its own terms or even attempt to understand its policies.

2. Have you seen https://meta.stackoverflow.com ? It is the exact thing you believe they "needed". As for "layers", the tiny group of people with diamond symbols next to their names (the actual moderators) did in fact have authority over others.

3. As demonstrated by the posts there, the large majority of "toxicity" came from the people who refused to accept the site's standards, and the large majority of question closures were clearly correct.

4. To me, the word "asshole" suggests a sense of entitlement. This was most clearly demonstrated by those who felt entitled to get people on the Internet to volunteer to solve their problems for free, without heed to whether the resulting Q&A could be of benefit to others. That is not how the site worked, or how it was designed to work.