This case is flimsy at best. For starters, I don't see them insulting any players, just characters and realms. Most of it seems to be in jest. I hardly think this is a toxic atmosphere. Sure, Merlin/Silnaria are getting a ton of flak IC, but that's the game. To say it with a meme, "If you throw a monkey wrench in the Cagilan program, you're gonna have a bad time". Maybe Zadar's comments on the forum are a bit too much, but then again, if we're to punish everyone who gets a bit heated in here, we'd do nothing else.
The argument that they aren't insulting a player rather than a character is flimsy at best. They plainly make fun of the realm's name in an OOC nature, which makes things much more personal. Besides, a realm's name is made by the player who creates it, and so making fun of it is personally attacking him, not the character. By the way Sacha, every one of those messages provided in the evidence post is OOC besides one or two, so that's not "the game". That's OOC.
