By my quick perusal of the code, it looks like they can indeed demote admins...
If you want to test it... make two dummy accounts.
Make one an admin, and one a mod with edit rights...
Then edit the dummy admin with the dummy mod. See if it works.
Basically... the part to look for is
usergroupid='$usergroupid',
If you delete that... then the edit display will still come up with the pulldown... but changing it won't do anything because it's not in the update query anymore.
I made custom code for my own Mod Edit... and replaced the Usergroup selector with a chooser that was ahrdcoded to the few groups I wanted them able to edit...
AND disabled it if the person was a mod/supermod/admin.
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