The idea that three to five people per site moderating is too much is patently absurd.
On the most popular sites—Ask Ubuntu, Gaming, Apple, Android, and Programmers—moderators account for less than a few hundredths of a percent of the total user base. On a site like Programmers, 45 times more new avid users (200+ rep) then there are active moderators are added every two weeks. Even on our least performing sites (e.g. Literature), regular users outnumber moderators 197 to 1.
A site like Programmers also generates 1,000 flags a month: about 10 flags a day for each active moderator. Combined with staying active on the site's meta, TL, and here, there's a lot of time spent per day for something that's entirely volunteer. Throw in the massive amount of effort by Stack Exchange to streamline and improve moderator tools for Stack Overflow and the other Stack Exchange sites because the moderator load has been too highthe moderator load has been too high, and the conclusion one ought to reach is that we need more moderators, not less.
And beyond that, each moderator is expected to be completely versed in their own site's activity and policies and be trusted members of the community: we're entrusted to act with a large amount autonomy and privileges because of that.
You say the solution is to start combining moderators: beyond the work each moderator does on their own site, they need to do it on other sites where they aren't trusted or possibly even active. How do you expect that to go? Everyone gets double the work and half the trust they have now, for what? Because you think 200 moderators sounds like a lot of people?
The overhead for having a few moderators per site is offset many times over by how it makes it so much easier for everyone that there are people willing to take the time to get heavily invested in a specific community to help guide and moderate it. I don't know why you'd want to look a gift horse in the mouth like that.
As to the suggestion that there are too many sites: on what basis? Have you been to Area 51 or any of the other sites? Each site was created because there was enough critical mass to create a specific audience about a topic. Most sites have been able to get traction precisely because the experts for those sites would not or could not contribute to a more general site. Most sites on the network are active and have found successful niches that are working for them with hundreds of questions and thousands of users.
Consider the person who looks at the price of an economy car and sees $9,000. He says, "Whoa, that's a lot of money! Why does it cost so much? I don't want to spend that much." Costs so much compared to what? Other new cars? No, that's on the low end. Other modes of transportation? Sure, but you don't get the benefits of the car. You want to pay less, you don't get the car.
In the same vein, 200 moderators and 70 sites sounds like a lot when they're taken completely out of context. But if you look at what's been built over the past 2 years, it's a small price to pay for what we've gotten. You don't want this many sites and this many moderators? You clearly don't want what makes Stack Exchange Stack Exchange: a network of niche sites full of topic-specific experts.