Again, it's irrelevant that some people threw insults at players in PvP. The exact same thing happens in PvE and the developers wouldn't dare remove the chat function there.

You're going to get toxic players in pretty much any online game. To mitigate it, punishing them for their behaviour rather than screwing everybody over with flawed quick fixes is the best way forward. Though as we know, unfortunately there's been people cheating for months and months who have gone without a ban despite multiple reports. It certainly feels like this policy was put in place to avoid having to ban players - and thus lose income from their subscription fees - rather than because the developers are truly concerned with bad behaviour. If that was their concern then they'd be rushing to deal with the infestation of botters and win traders.