^^^ I believe Dahall is actually correct in some terms. Let me check the ToS and rules.
http://wiki.spiralknights.com/List_of_known_filtered_words
'The information here is provided for reference only. Use of these words in public or via unwanted tells in the game can be basis for other players to ignore you, or submit a complaint. Misspelling the curse words to get around the filters are even more likely to get you in trouble. See the Terms of Service and Community Standards for further information.'
Best report those who do 'misspell the curse words'.
A little more research:
http://wiki.spiralknights.com/Community_Standards
'Keep it clean! - Using or linking to vulgar, obscene or offensive language or material is considered swearing. This includes any racial, sexual, unlawful, religious slurs, insults or other deliberately offensive remarks directed at another knight. While there is a chat filter present in the game, this does not excuse offensive language or behavior. Misspelling or mis-spacing words to get around the filter will be treated as swearing and dealt with accordingly.'
People who do try to surpass the profanity system can be reported by someone if that person wishes to do so. However in most cases, swearing does actually insult someone so don't wait and watch the world turn around. If someone does insult someone else with swearing / vulgar language, do report them.
I believe that anyone circumventing the filter should be banned >:(