You're invited to someone's dinner-party, you say that the food is bad and they tell you to leave. Do you argue with them? Do you try and have the homeowners thrown out of their own home? Do you go to the HOA and file some kind of petition? No, you leave the dinner party gracefully. After all, your home may not be so grand, but you can throw your own dinner-party someday.

Unless a subreddit is marked as "Private" and invite-only, it's not at all like someone's home with a dinner party. You can kick anyone you want out of your private home and serve poor quality food to your guests that may give them food poisoning. You can also have a quite untidy home that has an insect problem. Your home, your castle, those who you explicitly invite have a decision to stay or leave as you highlighted.

HOWEVER:

The moment you advertise publicly and serve the public with open-access, you have a responsibility to the public much like a business. As a business owner, you have to obey laws and regulations pertinent to running a business, you can't just set up and serve food in the middle of a major city, you need inspections for that; you also need liquor certifications; you also need to ensure your employees aren't discriminating. Fail to do any of this and you're setting yourself up to get shut down or sued into oblivion.

There should be by rights regulation limiting what mods of open-access subs may do, if a moderator doesn't like being accountable for running an open-access sub, they should step down OR easier: set their sub private so users aren't fooled into thinking that it's open when in fact it isn't and may be banned for the sake of banning.

Easy choice: Either be accountable and play by a well-defined set of rules to ensure you're servicing everyone fairly, or set your sub private and require application to join so people know it's an exclusive "home-like" club. Or if you don't like any of the options and want to run a completely arbitrary operation: Obtain your own web space and set up a forum of your own 'outside of the city'.

An ending thought: We go around talking about how $BIG_COMPANY is evil with how it's so arbitrary and needs regulation — for instance Reddit itself recently, yet somehow transparency is not needed with moderators on reddit just because they're volunteers. Why?