I too wonder why more sites don't adopt it.
Because of the initial chicken-and-egg problem. The Slashdot moderation system requires a large base of committed users willing to spend time on moderation, but if new users are only exposed to an unmoderated comment system, it's hard to convince them (or at least, the worthwhile ones) to exert any effort on the system. Even on existing sites, you're faced with the problem that the undesirable users are more committed to the site than the desirable ones, and enabling user moderation will make that so much worse in the short term that it will choke off the long-term. By virtue of its age, Slashdot circumvented this: no real competition, no expectation of moderation at all initially, and novelty of the moderation system all served to build a large base of potential moderators at launch of moderation. Even then, it's hard to estimate what degree of the success was just luck.