That could be a problem... it could be hosted by a normal user and then occasionally checked by a moderator. I am not sure if that will work though.
It would doubtfully work with a regular user passing out judgement on what and what shouldn't be an armatar. One thing is the poetry contests, where there is a simple merit award per win, and there is always a new chance. It doesn't actually affect anything, besides someone getting 25 points more.
With armatars, if your armatar suggestion is not selected, obviously you are no good at art, the judge is biased, all that jazz.
And it doesn't stop this from being something a mod will have been forced into, if they are the one responsible for getting the armatars up and so on.
No, I really do believe that, should anything like this work out, you either have to have a mod that actually cares about this enough to volunteer, or an admin that can get the job done instantly.
Personally I still hope they go for the "If you have enough reputation and have been a member for long enough and you are generally awesome, we will let you upload [number] of armatars, which can be used either by you or the public". Though that again might mean more annoying work tasks for mods.