Self-moderated threads are not only moderated by the thread starter, they're moderated normally by forum staff AND in a limited fashion by the thread starter. That's all. The thread starter simply gets the ability to delete posts in a self moderated thread. It doesn't give them the ability to edit others' posts. It doesn't mean the thread can operate outside of forum rules.
Basically a self moderated thread creator can use their deletion ability to enforce their own set of rules in addition to the forum rules. Literally if a thread is made with the self-moderation option the only thing that changes is that the thread starter can delete posts in that thread. Nothing more. That's a far stretch from "unmoderated."
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I'm calling for more moderation here (staff + thread starters), not less.
Hope this helps.
In light of the worsening signal-to-noise ratio of the technical threads on this forum (exponentially more problematic than when I initially suggested this, which is crazy), I'm reviving this feature request.