I always found the boards I enjoyed best back when I ran a C-64 BBS (yes, that was a BBS running ON a C-64 with a 1200 baud modem and two floppy drives) were the ones with appropriately benevolent "dictators" who used a light touch to keep things real and on track. I can't say I've seen anything on the internet to convince me that there's been a notable improvement on such.
Isn't this the role of Slashdot's editors? Or do they choose the stories as well? Either way, Slashdot has almost no interesting stories these days.
I'd actually been considering hiring someone to run HN, though not to moderate it in quite as hands-on a way as you're suggesting. Interesting idea though.
The later parts of the book (chapter 8 and beyond) seem applicable to the problems HN is facing.
PM me if you want, I'll send you my copy of the book.
On the topic of moderation I would suggest the ability to somewhat "follow" good commenters, and even perhaps block bad submitters. This way, reputation is not only karma, but quality of followers.
Be warned, he's going to strongly advise you to set up a backchannel for public metadiscussion. Jeff Atwood resisted it vehemently at first when another metafilter moderator was a guest on his podcast, but they did eventually set up their meta subsite in the same vein.