Jeeezzhhhh ok, so there are few things to agree with and few things to disagree with.
First of all i approve that the staff members such as in Chat moderators pay attention to in which case was the word used.
Since as you can see that Ideepyou used the word "Fuck" when he heard about the price i presume "Same thing if he would have said "Holly shit""
No, that is totally incorrect,
Moderators can play the game as they wish, PvE / World PvP / Arenas / Bg's, etc..
And if you get "Ganked" it does not give you any right to insult anyone what so ever, because it is World PvP, deal with it, either get some friends to help you or just move away.
What Licher said there is somewhat true, it is our job to mute people which violate the rules and which break them, and we could get reported for "Not doing our job" When it comes to situation like this.
I my self have closed my eye couple of times when someone says an obscene word (Nothing big, same case like this) but i see when he said it and why he said it, so i didn't punish the guy i have told him to watch his words since he can get muted.
But like he said he got scared that he will get reported for not doing his job.
But regardless, moderators should pay attention of the Context in which was the word used to avoid these type of things, be reasonable, we are not robots.