It seems to me like the easiest way to avoid any issue with the profanity rule is to simply not use bad words in circumstances where they could be seen as inflammatory.

I don't think anybody's ever been punished for saying vulgar things in their FC chat or otherwise amongst friends, but if someone is cursing like a sailor in a public chat, in front of strangers, that is not appropriate social behaviour and anyone who wishes to report it is fully justified in doing so.