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Its possible the avatar cores are based around the actual people, which are the customized/tweaked (of course Rommel defies this explanation. But since the show is still pretty open, there's always the possibility that he's some sort of VIP member, or the result of some rare transformation item or something)
As for moderators, I actually don't mind not seeing them, they work behind the scenes anyways. These sort of issues are handled outside the game with coding and whatnot, not by being in the game and playing with gunpla. I've also seen real life cases where moderators/tech people stand back and observe cheating, to learn about how its being done/exploited etc. Plus we don't really know how long this has been an issue either, I highly doubt its been around for any extensive period of time
That aside though, at the end of the day the story is aimed to simply have the cheaters as the antagonists, and the main cast have to take a personal stand against cheating (instead of having mods solve all the problems for them). A basic premise for a story based on an MMO game.
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