I like people thinking up ways to improve the karma system in general. I’m concerned that this system as described weights the preferences of the moderators (and people that the moderators like, etc.) too heavily.
Suppose, hypothetically, that a clique moved in that wrote posts that the moderators (and the people they like) dislike, but that are otherwise extremely good. I would want that clique to be able to gain karma corresponding to how good their posts are anyway, and it seems like in this system that’s harder than I’d want it to be.
Your point can partially be translated to “make α reasonably close to 1”—this makes the decisions less about what the moderators want, and allows longer chains of passing the “trust buck”.
However, to some degree “a clique moved in that wrote posts that the moderators (and the people they like) dislike” is pretty much the definition of a spammer. If you say “are otherwise extremely good”, what is the standard by which you wish to judge this?