So, I amdo not a moderatormoderate on Stack Overflow, but rather Code Golf, and I will offer a bit of insight. Maybe I'm allowed to share more, but this is just what I think I'm reasonably comfortable publicly talking about, since giving away all of our tools to the public is a great way to get exploited even more.
Due to SE's core policies about allowing anyone to participate, like you said, it does also result in more negative or harmful activity. Now, there are systems against this, such as automatic IP bans like you suggested. However, with VPNs and TOR, throwaway temporarily email address generators, and things like that, it's hard to properly filter out people we don't want on SE ever again without harming others' ability to contribute - or even at all, without caring about the latter group. I won't go into much detail about the mod tools we have available, but even with them, obviously no system is perfect.
Now, to address the question of what more can we do? Not much, to be completely honest. If it's getting serious enough to the point that the moderators are being totally overwhelmed and can't stop it, we can raise issues up to the Community Team and they have more extensive measures they can take against things like this that aren't available to us.
Until then... just keep flagging and reporting. It's annoying, yes, but the tools for us to get rid of problematic users don't actually take a whole lot of effort to use, it's just that SO, even with 24 mods, is so active that they're always busy. In fact, the effort a troll needs to go through to bypass bans, bypass all restrictions, try to evade moderators, and keep trolling is much more difficult than the few buttons I need to press to put that all to waste. So, most trolls eventually find it's not worth it.
We've dealt with things like this on the network before. In fact, there are persistent trolls that are still around. I hope this troll gets bored and goes on to do something useful with their life, but some never do. We can only keep using the tools available to us to keep the noise ratio on SE as low as possible. No system will ever be perfect, and we'll never be able to screen out all trolls before they can post or even get rid of all negative content retroactively. We just need to do our best.
So don't worry too much about it. There isn't much special that can or needs to be done. Trolls that get bad enough will eventually face the wrath of the CMs, but removing trolls is a constant process. After all, if the system was perfect at preventing bad things, we wouldn't be needed here :)