I am an administrator/site owner of a medium sized gaming community that runs on a PHPBB3 board. We host multiple game servers as well. I've got a team of moderators that help keep the forum and game servers clean. I've run this site for 5 years, after taking it over from the original creator of the community who wanted to move on. In my time as admin, we've seen the number of participants on the forum increase. We've seen our game server population increase as well. I attribute this to getting the community involved in change discussions.
One of our biggest changes occurred several years ago. Community members complained that our game servers would be over run with trolls at hours when moderators weren't available and spewing filth. The community wanted a cleaner game server experience. Users wanted these players gone immediately. Previous community leaders felt that trolling of this kind was part of the game and did nothing. After some discussions regarding what was and wasn't appropriate, we decided to be (for lack of a better term) "family friendlier". Certain 'extreme' phrases were no longer tolerated at all. A technical solution was built to automatically remove players that violated these rules. This solution allowed users to swear, but once it became excessive (again, defined by the community) they, too, were removed.
The tool we have (PHPBB3) may not have the reputation, badges, or increasing privileges used here on Stack Exchange but for my community that has not been a negative. Engaging with the community in discussions and letting the members provide input that me and my team utilize has been extremely beneficial.
I have no experience moderating a Stack Exchange site. I don't feel that's a down side though. I can provide the "outside" perspective in a Stack Exchange heavy group. That does mean, though, that I'd depend on and expect the community to provide feedback on how moderation in being handled. Much like my existing gaming community, input from the community to the moderation team is important and the moderation team should be listening to that input.