I ran a small community (thousands of members) that way and I think it was the best (or rather, least bad) approach. There are a few reasons why it worked IMO,

I ran a small community (thousands of members) that way and I think it was the best (or rather, least bad) approach. There are a few reasons why it worked IMO, but the practices seem extremely difficult to scale. - I spent a lot of time building good will in the community: personally interacting with members, calling out great community participation, etc. My positive interactions outweighed negative probably 5:1 or 10:1. - I used the ban hammer exceedingly rarely. Like, probably about twice per year over the course of ten years. - This was a pay-gated community, which cut down on troublemakers - Moderators enforced policy, but I was the only one who could actually ban