"The disastrous policy of ‘silent’ moderation prevented the moderators from either responding to direct questions or explaining why they were not responding. The moderators, an independent company appointed by the Cabinet Office, were seen by users as arrogant and unlistening. Furthermore, in deciding a policy of never responding to any comments, the moderators are unable to explain their operational management of the site, so there is no proactive attempt to steer the discussion, appeal for better behaviour by participants or explain deletions of messages. Users of the site have developed a conspiratorial picture of the moderators. Much of the discussion is about the moderators and how to beat them. On one occasion personal information about moderators appeared online. This is unavoidable unless the current policy is abandoned and the moderators become vocal participants with an accountable role.
You cannot have a healthy community - whether in real life or online - unless those in authority are part of, and answerable to, the members of the community. Without that you have a dictatorship or police state, and in such climes a rebellious underground is naturally fostered.
There is a saying derived from the original goal for the Internet, to be very fault tolerant, and even in principle able to survive a nuclear attack:
The Internet treats censorship as damage, and routes around it.
.. and the preservation on an independent system of deleted messages from a forum is a perfect example of this.
As moderators, the Hansard Society made a policy decision to allow such comments to be made once or twice, but then to CLOSE THE DEBATE ...
There is an alternative, much easier to achieve in online systems than in real life: move the debate elsewhere. It is perfectly reasonable to say "such discussions are off topic in this area, and will be moved to the 'CitizenSpace - what went wrong?' area by the moderators".
The social aspects of MUDs are a very fertile area for study, and much has been written about this field already: see Measuring Bartle-quotient as a useful starting point for links.
In my experience, there are two quite distinct climates: traditionally, all MUDs were free. The authorities called themselves "the gods", and had godlike powers within the scope of the game. The majority of players accepted that the entertainment was free, and that the gods can be capricious.
More recently, a number of pay-to-play MUDs have sprung up, and I've been active on one of them (Runescape) for the last 12 months or so. The tenor here is quite different: people have paid to play, and the attitude to the authorities is far less forgiving; it is telling, too, that here the authorities once again call themselves "moderators".
While I have never encountered such a thing on a free MUD, Runescape instituted an automatic censor shortly after I first found it: all messages from a user, whether a private message to another player or something more public, are subjected to the censor which replaces anything objectionable with asterisks. Surprisingly I've noticed few objections to this, notwithstanding its unexpectedly wide scope (censoring for example rude words, anything that looks like an email address, a telephone number or a website, and the individual names of several games in direct competition to Runescape) and its zealousness (rendering for example "latitude" as "la***ude").
Perhaps the reason for the relaxed attitude of the players is that, once again, it is nothing that can't be worked around - small modifications can usually defeat the censor without obscuring the sentiment, and everyone knows what "fyck you" means.