I am currently a moderator at an australian forum at ZGeek.com
. I moderate the Photoshop & Photography forum there. The forum has 17,197 members. Currently there is nothing to moderate as people haven't posted much in the forum I moderate and all the photography and photoshop competitions et cetera have stopped for a while.
Having said that the administrator asks suggestions from old moderators when it comes to choosing a new moderator or suggests one member and then hears what the old mods have to say about it. The forum also has special editors which are like admins but with limited admin access. They can help clean up the forum etc.
I don't think there is nothing wrong with taking in volunteers as long as the admin trusts and likes him. How ever the moderator is chosen there should be strict moderating rules set in a sticky thread for the moderators at a hidden forum visible for mods and admins only. A forum for moderator logs is also a good idea. That way the admin knows what the mod has done and when it was done if there is a problem.
And having said that I don't think this forum is big enough yet to require any additional moderators as there does not seem to be any problem users or fights.