At the end of each mediators period of activity (7 days) they are put on the end of the list. Then, the three people at the top of the list are set as mediators. New applicants are put at the bottom. This way someone that has been a mediator can do so again in a couple of weeks.
probably a good idea, keep fresh eyes on the server. and that dealing with the average Minecrafter can get fairly annoying pretty quick. (I Remember co-hosting a Creative server where it seems 15-20 people got kicked or banned a day for being a freaking moron.)