jesskitten: I think usually in games where the mod is also a player, it's usually tied to some player's win condition or is some sort of role that is detrimental to town or both sides (see the game Zchinque linked on MtG Salvation, or the Mind Screw games on MafiaScum) or something, though sometimes it just seems that way but is actually helpful. Usually one of the more advanced bastardized games though where everyone knows to expect the unexpected and wacky.. right up Damnation's alley really. :p
In those games the mod is usually just a hidden in plain sight kind of player that doesn't usually post or do anything else (like he wouldn't actively try to lynch the mod or whatever, but is more there for flavour or as a roadblock to remove at some point).
Meant it mostly as a joke in this case of course though! But if the mod existed as a player and he got lynched or NKed, the game would continue as always, just that his player aspect is removed from the game.