I don't think this is entirely accurate, as sites like Facebook and YouTube have had large mod teams on their payroll for years and still have safe harbor protections for user created content.
What I could see happening in this case, is safe harbor protections no longer applying to accounts with mod privileges, possibly even those who aren't being paid. If Reddit started paying mods, it could be reasonably argued that mod status constitutes an endorsement / publication by Reddit inc for anything a mod account posts. It would also give anyone working as a volunteer mod cause to sue for unpaid wages.
I dunno. It's hard to separate the two roles of mods. One role is in preventing abuse--posting illegal content, hate speech, etc. But another role is in policing the content for what does and does not fit a forum's purpose. You can do the first and keep section 230 protection, but the second is inherently and inextricably editorial in nature, and you can't do that without losing protection. And I don't think the lines between these are well-enough defined to enable you to make them two separate jobs without getting into trouble. Like, a lot of communities allow a little self promotion, but not spam. Managing that is a ton of work, but probably can't be a paid role because it's a judgment call. That sort of thing.
It's frustrating, because it's pretty clear at this point that this is one kind of web site that we really want to have exist. But the laws around this are really janky, and trying to revise them is a problem because the debate around them is even stupider than the laws themselves.