In the docs it appears that the Moderators should be listed by username, although if you try the "Send Test Email to Moderators" button in ic_diagnostics.aspx, it grabs the list of Moderators from the web.config and each must be listed as an email address.
An Exception is thrown if the Moderators are listed by username, but I'm pretty sure the Moderators need to be listed by UserName, to actually be able to moderate?
Example
// Test email FAIL
<add key="Moderators" value="geoffrey.mcgill"/>
// Test email PASS
<add key="Moderators" value="geoff@coolite.com"/>
Anywho, just thought I would point this out. Maybe I misunderstood something in the docs?