"The last problem I would like to address is the staff-selection process. The problem is that only staff have a say on somebody's promotion into the staff. The reason this system will fail in the long run is that it means that if it gets to a point where there are a lot of bad mods/admins, no good mods/admins will get added. In the long run, a better alternative would be user-nomination by other members, and then the staff would vote on these nominations."
This part perplexes me because:
1. The only persons who truly know what qualities a mod require are the mods themselves. Members here will simply vote for the "LOL ZOMG POPULAR FRENDLY GUY XXD" kind of member and completely ignoring people who actually has the potential of being great mods/admins
2. The idea of having members nominating will only delay the process of choosing a new mod/admin. Seriously, if a lot members nominate the same member due to their qualities (helpful, friendly etc), the staff has most likely already considered making that person a staff member. A complete waste of time imo
3. It will end up being a popularity contest
Also, all of this can simply be solved by bringing in that User Survey that SCS suggested