I am ambivalent about this. Yet here are some concerns and suggestions.
1. You have a hierarchy. The problem will arise where a group will not fit any hierarchy. How do you resolve this? 🤷🏻♂️
Must note I already have some qualms about the current hierarchy. Beliefs does not belong under Spirituality & Religion. Spirituality & Religion belongs under Beliefs.
The Religion group should actually have various religions in them. Not certain aspects of one type of religion. Like there is no categories on religions themselves.
Just like the Abrahamic beliefs have categories, so do the Hindu and Pagan beliefs have categories.
2. If the above is somehow resolved, there needs be some kind of limits and penalties. Not just on the number of groups created. Yet within any given category as well.
I remember well the mess Usenet became. Haaaaa designing ASCII art out of the group hierarchy!
3. Like in 2 I mentioned penalties. There should be many penalties for different actions. Like if you create a group and don't post in it that's basically trolling. More than just a"reputation" penalty should be given.
Then there's the moderation you briefly touched on. Not everyone should be allowed to moderate. Nor should they be miniature dictators like on Reddit.
4. speaking of which, moderators on Reddit are allowed to create their own moderation bots.
Please don't allow this. I beg you to don't allow moderation bots. Reddit is a good example of why bots shouldn't be allowed. It's easy to become a miniature dictator using bots.
5. A different suggestion. Let people create temporary groups. Groups that exist under their own hierarchy and will disappear after non use. The posts can remain in the main hierarchy yet the group itself will disappear after say six months of non use.
If a temporary group should remain active after a year then you the admin can place that group in a proper category related posts and all.