Matthew said:
The system you described is more of a glorified poster/section expert. That doesn't take away from the point that unless your site has ungodly activity, generally 1-4 global moderators (more depending on activity) can handle the issues that do arise. There's virtually no point other than encouraging someone to post in a section in having sectional moderators.
So, I do agree they can be useful to keep a section relatively active but moderation powers in these individuals are virtually pointless. At best they will delete a few posts or say "let's get back on topic" from time to time. Not worth the human resources needed to apply a system like that. Think of other reward schemes for those you want to maintain a sections activity. Double forum currency for that user, offer random incentives, etc.
Sectional moderators are also fairly useless because what happens when they are the only ones on in an emergency? (Talking about mid sized, decently active forum where a few users might be around that aren't staff.) The moderator would essentially be useless and this would not only make the moderator look fairly bad, it'd make the entire site management look terribly unprofessional as well. Of course, this is why I stated in my post that for sectional moderators to work, they would need global moderator permissions to be used in emergencies. Cross training is, afterall, one of the most useful things in any kind of management.
You may be surprised, but taking example of sub-forum for Naruto manga, we could have 3-4 sectional moderators at its most active days. Members were actively posting, spoilers posted randomly, trolls responding and bashing each other, events taking places, and other discussion threads to tend to. There was a feature showing number of moderation actions each person did, and some sectional moderators could have higher numbers than global moderators. Global moderators tend to take care of spams, wrongly placed threads, or multiple accounts, while also sometimes helping with direct moderation. But sectional moderators focus on dealing with trolls, empowering discussions, and organizing local activities, which worked well in most cases.
It was not a reward system at all. All positions were voluntary so no moderators were paid in any other form. Not all sub-forums have their own moderators too. Minor sections are handled by global moderators or administrators.
Also, with the big number of global moderators and sectional moderators, we somehow managed to be able to cover almost all hours in a day due to timezone variety. So emergency cases are handled pretty fast and carefully; sectional moderator makes a report, any global moderator/administrator online takes care of it. Not that we especially took note on timezone when hiring, but it happened naturally that way.
In my opinion, this system works wonder due to the size of the forum. Many posts are made daily and there are many members to support the need of staff team members to handle many situations.
It's true that with the system I described above, moderation are largely done by global moderators and local moderators; administrators usually weigh in when even global moderators are not sure of, in emergency cases, or in huge/very serious cases.