Your idea of nominating or voting from a group of high-level users and top brawl creators with few appeals against them is a great start for selecting reliable community members.
I think to avoid potential biases or overburdening a small group of moderators, you could introduce rotating panels for dispute resolution, the system could select different moderators from the pool of high-level users based on their reputation score, ensuring that each dispute is reviewed by a fresh set of eyes.
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