Honestly, I think everyone sometimes makes a mistake and goes overboard on the trashtalk. The point is, I hope people don't go ban crazy for one instance of insults. I think a slap on the wrist in the form of 5-10 summoner levels less could be done for the first time or second time, and stern message saying something like:
"A severe infraction of the TOS involving obscene, vulgar, or racist comments has occurred in this account. This lowers the entertainment quality of the game significantly. Penalty: 10 summoner levels deducted. Future infractions of this level may result in a termination of this account"
Hopefully there is a way for the mods or admins to see the game log, so they can tell if it was just ordinary trash talk (which can increase the quality of the game) or joking around.