Monica was a well-known, well-liked, and well-respected moderator across the Stack Exchange. Her moderation status was suddenly stripped away because of an alleged protracted spat about pronouns in a chat room.
Perhaps her remarks in that chat room eventually got to the point where there needed to be some kind of intervention and discipline, perhaps not. Opinions are divided and details are scant. However, one of the foundations of the Stack Exchange has been Jeff Atwood's Penalty Box analogy:
If we think you are reachable, and the behavior is one that we feel can change, we will try to warn you via email first when there are behavior problems — so that we can address them before they become deeper problems.
Depending on the severity of the problem behavior — and at the complete discretion of the moderator — your account will be placed in timed suspension for anywhere from 1 to 365 days.
At the end of this timed suspension period, your reputation will be recalculated, and your account will resume as normal. We don’t hold grudges. The point of all this is to address the behavior. If the behavior improves, you are welcome back.
Many of us are appalled at the way Monica's situation was handled – or mishandled – from the outset. You don't just step in and overturn four SE moderator elections in one fell swoop because of a heated argument in a chat room. There is a process for removing moderators; it was ignored.
The answer to your question, "What could have been done to prevent such a negative reception?" is simple: The company could have let cooler heads prevail. They could have pressed on and continued to polish their CoC clarifications, but, before releasing them, they could have first righted the rash wrong and made Monica a moderator again.
When I first caught wind of this whole brouhaha, I thought for sure within a week an apology would come and Monica would be reinstated on all the sites where she moderates. Naively I thought, "Level heads always prevail on the Stack Exchange." Instead, the community was coldly informed, "We are not going to re-litigate the past. We are moving forward. We are working on how we can do better next time."
I think that many of the downvotes this week may have been upvotes had the CMs simply admitted that they bungled this – and not just because of the timing around a Jewish holiday. Instead, they gleefully pressed forward and ask us to embrace a new era of inclusiveness as if this were something worth celebrating, all while one many of the longstanding community members wondered what in the hell just happened.
In short, they drew their line in the sand, and their own obstinance doomed the reception of their new clarifications. Had Apology 2.0 come with a reinstatement, much of the turmoil could have been quelled, and the community may have been more open and receptive to the new changes and clarifications. Instead, it feels like it is being shoved down our throat.