To start out with, our role, in part, is to engage the BM community in discussing the rules and how they should be applied. Tom specifically empaneled the Magistrates as an open, public body of known membership in order to establish a more transparent and participatory process than that used by the Titans. The establishment of a body of precedent that could guide players is one of the purposes of our existence. There was a sense that the secrecy of the Titan process was leading to a perception of arbitrariness and unfairness in the enforcement of the rules, hence why the Magistrates were devised as an experiment, and why all members of the community are permitted to participate in and comment upon our cases.
This case is somewhat difficult. Racism, homophobia and other forms of intolerance are not explicitly forbidden by the Social Contract, but it could certainly be said to fall under the "play as you would with friends" clause. The importance of that statement cannot be overstated. Each of the explicit bullet points that follow it are one specific example of what friends playing a board game would not or should not do, i.e. cheat or insult each other. However, those bullet points are not an exhaustive list of the things one should reasonably avoid doing in order to maintain a friendly atmosphere. Common sense and discretion should always be applied to all interactions with the community, particularly given the world-wide player base of this game. As such, references to RL religions or racist stereotypes are things that probably should be avoided. Their potential to offend is great, and as has been pointed out, for the most part you do not truly know the people behind the other characters in the game. You may be able to make racist jokes with your good friends, whose attitudes and reactions are well known to you, but would you, upon meeting a Jewish person for the first time, immediately start cracking Jew jokes that rely on potentially offensive stereotypes to power their punchlines? Not until you knew him a lot better, I would hope. A similar take on graphic descriptions of torture, murder or rape should also apply; in a close RP group whose members you all know personally, such things might be acceptable depending on the group. In a community as diverse and essentially anonymous as the BM community however, they should probably be avoided. Young people play this game too, after all, and even older members (such as myself) may find such descriptions offensive or sickening. The long and short of it is, one should always be mindful of the fact that not all BM players will share your cultural background, or even speak English as a first language. In all cases, common sense should be exercised.
It is my opinion that if enough people feel offended by something for there to be seven pages of debate on the subject with multiple players arguing that it is offensive, then it probably crossed a line. The community itself, after all, ought to be the ultimate arbiter of what is and is not offensive to it in general terms. We, the community, have a right to decide what kind of atmosphere we want to promote in the game subject to the dictates of the Social Contract and Inalienable Rights. If we do not want to accept racism, then that is that.
I would also like to point out that in a case like this, a player's first resort should always be direct contact with the offending party. If someone says something you find offensive as a player, please contact them privately and politely explain that you were offended, why you were offended, and ask them not to do it again. I expect that in most cases, that player will simply apologize and the matter will be concluded with a minimum of fuss. If, on the other hand, the player disagrees and continues with the offensive behavior, that is when we can get involved in order to help settle the dispute. What I would like to avoid is us being the first resort, rather than the last. I have faith that 90% of potential disputes can be worked out between players without any involvement on our part.
Finally, to the matter at hand, my one reservation is that I am troubled at the prospect that Kas, not being a native English speaker, may have been using the language he did in a more literal sense. It certainly sounds bad from a native speaker's perspective, but the more subtle connotations and cultural import of those specific phrases may well have been somewhat lost on him. I am still fine with issuing a guilty verdict, but I would prefer to keep it to a private warning that simply explains why such language can be considered offensive. No further punishment would seem to be required.
