Moderators don't need to exist without rules. At the same time, moderators are nothing but forum members just like you and thus don't need rules any more than the next member. We are selected because we approach things in a fair and reasonable manner and the rules have little to do with that. It's in our basic personalities to be fair. I'm still not getting why on earth you think moderators need rules any bit more than you do. :shrug: It just does not make sense to me.
And we have had times when te refer folks to the terms and conditions and that is that, but we try very hard to always give the member the best chance and fairness we can. After all, what would a forum be without it's members?
Moderators need rules more so than the average forum member because they have more power, with power comes responsibility and with that comes moderation. What's the worst that I could do as an average forum member? Say a couple political or religious statements, and all that can come out of that is one or two people who read it get offended. In contrast what can the average moderator do? They can ban people because they don't like them or warn someone because of a personal bias instead of basing it 100% of how much it violated the rules, and what comes of this is much more important than offending a couple of people. I wouldn't put it past people to no longer decide to buy games or not recommend the company to their friends because of the above incidents. Think about companies where there forums are terribly regulated and their moderators are ban happy, doesn't that make you respect that group of people and/or company less, maybe even to the point of not supporting their products because you know you won't be able to get much help?
As for the moderators being selected, this isn't going to weed out all the bad eggs. I've been a community where the only way to get in was to be invited, and this didn't stop issues of power abuse from happening. On the issue of the integrity of the moderators here I'm not going to argue it as it is moot, unless I point out specific instances I think it's not worth arguing as it is just a matter of opinion, and if I were to point out a specific instance I would be warned. While the "don't call us we'll call you" system often works to filter out people with bad intentions that doesn't mean it is a perfect system by any means.
Maybe I am referring to a "code of conduct" (It's in quotes as I'm not sure if there is a literal code of conduct in the admin forums) instead of rules, but the bottom line is without some sort of guidelines physically there or just implied, the forums would be a very different place.