ElGamal Threshold Cryptosystem
My question is: since $s$ is an element in $Z_q$, shouldn't $b_js_j$ be also calculated $\mod q$? 


Doesn't really matter - the results come out the same either way.

We know that the order of $C1$ is $q$, and so we have $x C1 = (x+q)C1$ for any $x$.  Hence, we have $b_js_j C1 = (b_js_j \bmod q) C1$

In practice, we generally want to reduce $b_js_j$ mod $q$ for performance reasons (or because our point multiplication routines might not handle multipliers significantly larger than $q$); however the math works out the same in either case.