This question is related to this comment, and to this follow up posting.
Working in mono-sorted first order logic with equality and membership:
Define: $set(x) \equiv_{df} \exists y \, (x \in y)$
Axiomatize:
Extensionality: $(\forall x \, (x \in a \leftrightarrow x \in b) \to a=b)$
Separation: $(set(a) \to \exists \ set \ x \, \forall y (y \in x \leftrightarrow y \in a \land \phi))$
Reflection: $\forall \ sets \ \vec{p} \ (\phi \to \exists \text { trs } x : set(x) \land \phi^x)$
Where $``\text { trs }"$ stands for transitive, to mean closure under membership $\in$ relation; and where formula $\phi$, only has $\vec{p}$ as its free variables, that doesn't use $``x"$ in both schemata; $\phi^x$ is the formula obtained from $\phi$ by merely bounding all of its quantifiers by $``\subseteq x"$.
Now clearly this would prove all axioms of $\sf ZF-Reg$! I'm not sure if it is stronger than $\sf ZF$ and of the strength described in Page 6 of this article, hence this question is about if that is the case?
Call this new axiom system $K$.
First, note we can augment the reflection scheme to
$$ \exists x (trans(x) \land set(x) \land (\phi \iff \phi^x))$$
By simply doing case analysis on whether $\phi$ or $\neg \phi$ is true and applying the reflection principle in either case.
Now recall the class comprehension scheme of MK, which consists of all the axioms $A_\phi$ of the form
$$\forall \vec{P}\exists M (\forall x (set(x) \land \phi(\vec{P}, x) \iff x \in M))$$
For any formula $\phi(\vec{P}, x)$ (where $M$ does not appear). I claim each $A_\phi$ is provable from $K$.
For consider some transitive set $t$ such that $A_\phi$ is absolute for $t$. We wish to prove $A_\phi^t$. This formula becomes
$$\forall \vec{P} \subseteq t \exists M \subseteq t (\forall x \in t (\phi^t(\vec{P}, x) \iff x \in M))$$
Take some $\vec{P} \subseteq t$. Then such an $M$ exists by the separation axiom scheme. So we have proved the class comprehension scheme.
With the class comprehension scheme in hand, we can prove the consistency of ZF - Reg in a straightforward way. This is because we can develop the model theory of class-sized models and prove $V \models ZF - Reg$. We can then prove the soundness theorem for class-sized models to conclude that $ZF - Reg$ is consistent.