I completely deny it having an effect. If you are playing a niche early access game such as this (in a fairly obscure genre), you know your way around a mouse and keyboard. Any gamer that has spent any amount of time playing North American multiplayer games has learned to ignore that dude named "Hitler" talking about his collection of "My Little Pony" dolls.
Or they've gone to play another game. So which player do you want to keep? The one spamming hitler is my hero, or the ones just playing the game in silence. Stop assuming everyone who plays Mount & Blade games are superhumans who dont let people like this piss them off. Thats one of the reasons why the NA scene dried up faster than EU in Warband. Its not that they burst into tears whenever someone writes this stuff, but it ruins the fun. If you're at a restaurant and someone a few tables over takes a **** on their table, you can choose to ignore that or you can ask the person to be kicked out.
Your reasoning is flawed for a variety of reasons you have probably not considered.
1. A report system implemented would only affect Taleworld's official servers. This is an issue because people will nearly entirely stop using the queue system once custom servers are implemented.
2. Hate speech is entirely objective, and this becomes an issue when most of the devs and the community managers are not from North America (like you seem to be). What is hate speech in Turkey is not hate speech in Europe and what is hate speech in Europe is not hate speech in North America. We have already had an issue in the community with this, as some Taiwanese players playing on Asian servers criticized the Chinese government and were banned by rogue moderators from China for hate speech (under the guise of cheating). Although this situation was resolved and the individuals were unbanned, it demonstrates the different standards that different regions will have.
3. Who will be filtering through these reports? Will Taleworlds dedicate paid staff to moderating this? Probably not, instead if such a system is implemented I predict they will call in unpaid interns under a system they will probably make a forum post about, with some smooth words about "community involvement". After this occurs, you will have untrained, unsupervised individuals from the community handing out bans for a game that individuals have paid for.
4. I still do not see why people are forced to participate with a chat and be "uncomfortable" when the mute button exists. Just hit the mute button. It's there... and I believe it permanently mutes individuals you click the button on until you unclick it. Considering the 100 active people in the entirety of North America, it seems fairly easy to just click click click and the issue is resolved.
1. Even if thats true which it seems its not, thats the only servers we have right now, if that was added on early access release, it'd mean atleast a year before custom servers were released. Thats already worth it.
2. True its objective, somewhat. If someone constantly spams the n word on a server, I honestly dont care if its hatespeach of not, hes being a little ****heel whos failing as a human being. If someone spams racist, homophobic or sexist garbage on a 100 slot server, I see absolutely no worth in that person being allowed to play, give him a few hours to calm down and maybe re think his decisions.
If you're talking about politics or religion, you have somewhat of an argument, but 90% of the people we're talking about are not doing this in good faith and certainly not doing it to discuss politics. Theyre doing it to troll, and trolls are annoying. This is also not the place to discuss politics, we're there to play, not discuss the 2020 election.
3. A good community would have a dedicated and paid staff to go over this information and decide what gets punished. Lets face it, it'll probably be interns or unpaid moderators but as long as theyre trustworthy members of the community, I see no flaw in that. Have some transparancy on why they were banned, hell Im in favor of posting the reason they were banned somewhere public so everyone knows, and disputes can be made easily enough, as they are in every other online game. I know of several people who would gladly help moderate the game to keep players happy and playing, this shouldnt be an issue.
4. Nobody is forced to participate in the chat, its about creating an environment where everyone is having fun. Again the question comes down to who do you want to keep in the game. I much prefer having a healthier game where people arnt toxic bags of garbage and actually play the game, instead of a game where people try to out edge eachother. The mute button only works for that play session, so every game you have to re-mute (as far as I know, I havnt used it)
I'll throw a random vote against overdone language filtering. After all it's 2020 and by now everyone knows easily offended people are never satisfied with what they get and this request can lead to others in similar fashion. Like, ever noticed how when you make black character he has a regular angry white boy voice? After we make game forbid racist chat messages let's make the game itself not racist by whining how we want black chars to sound like hood gangstas.
What about a well done language filter? You're assuming everyone will report people for the tiniest thing they said, like me saying "you died like an idiot" would get me 10 days ban. That wont happen. Stop seing conflicts where there are none.