Definitions of "vulgar" from one dictionary or another are irrelevant. As in many cases, you are getting far too caught up in technicalities and arguing like lawyers.
For the purposes of this feature, "vulgar" means "speaking like a peasant"—using words that no noble would ever use.
It's not about insults. It's about insults using lower-class language.
Furthermore, while the feature itself is quasi-OOC in nature, it is intended to represent the entirely IC mechanism by which a shockingly vulgar letter is passed around through gossip, thus letting many people know that the person who wrote it is not as noble in his words as he is in his blood—and thus, making him be seen as less honourable. This is why letters seen through it are, indeed, intended to be treated as if your character knew the contents (if you choose to do so).
Note, however, that despite Vellos's repeated protestations to the contrary, using it as a mechanism to deliberately leak secrets to enemies is an abuse. If you want to leak secrets, just send a regular letter to someone you trust.