I've heard various ideas such as limiting it only after mods have expended their points (this will require implementing a cooldown to prevent a user from getting points again too soon). I want to hear your feedback, and I'll roll together something for the next major update of the site. Leave your comments
If I need flowcharts to explain why you can and can't moderate system, I think it fails the simplicity test. Moderation is supposed to be quick, easy, and painless, not requiring brain surgery, and a deluge of posts that "I can't moderate X"