I've finally had the chance to update to the latest versions of everything and to poke around a bit.
The short answer is: To allow such granual tuning of the user permissions (eg: being able to moderate but not delete) without making any changes then the easiest thing would be to create a new vBulletin usergroup modeled after the "moderators" group, change the usergroup permissions for the new group in the Gallery settings so that they can't delete other's images, change the category permissions for the new group accordingly, and then add the moderator to that group as a secondary group.
What's happening is that if you "Add Moderator" to a specified category then that user has access to all of the "Admin Options" from the Image Tools drop-down box, which includes deleting, regardless of their usergroup permissions. The Add Moderator function essentially acts as a giant override to all of the permissions and gives them the Stick Image / Close Image / Set as Category Image / Delete This Image options. Really the "Add Moderator" option should be renamed as "Add Admin" or in the Gallery ACP there should be a new configuration menu to define "Gallery Moderator" permissions because a "moderator" really shouldn't have access to everything by default.
I'm going to copy this thread into the Suggestions forum so that it's looked at when features are added but in the meantime it looks like the slightly more complicated but changeless method will be an additional vB