It always has been a suspendable offense to use profanity, masked profanity, slurs, hateful speech, sexual content or inuendo, doxing, etc. Since 2004. I have the original rules linked if you really want me to post them.
It does depend on people reporting you for GM review - Blizzard does not have an AI scanning for infractions and automatically doing something. Yet.
You are right, they don’t care WHY you said something, just that you did. Never let yourself get baited into breaking the rules. That lets a troll win. Just right click and report them - like you are supposed to. It will also mute them for that play session until you log out.
From Blizzard’s point of view, the Master Looter has total control and you agreed to that. Never join a Master Loot group if you don’t trust the person. Now, they do investigate scams and intentional deceit, but master looter was designed for that person really to be the Master over the loot. Blizzard rarely gets involved in loot disputes and does not re-distribute loot that is being contested. Now, a bad Master looter will get a terrible reputation on their server which will impact them Socially as you said, but it is not against the rules for a master looter to do what they want with loot, generally speaking.
Classic WoW
In WoW Classic, there are multiple loot methods that allow you to manage loot directly. For this reason, Customer Support will not redistribute loot in the event of a dispute between players. Scamming other players is a violation of our World of Warcraft game policies. We will investigate any reports of scamming that we receive and take the appropriate action, removing gains and penalizing those who violate this policy as needed. Items and gold will not be redistributed in these cases.
If you’re playing with a new group, it’s advised to always be clear on the loot rules before proceeding. Discuss the plans for distributing loot with the raid leader before you become locked into a raid. This will provide you with an opportunity to make an informed decision on whether you want to decline the invitation or leave the group.
We encourage you to group with others you trust, especially when using Master Loot. Ninja looting does have consequences in the community, and those who do it will have trouble getting invited to groups. Remember to play nice and play fair, especially when using Master Loot.
Please be careful running with ML. Blizzard does not intervene to help you get anything if a bad ML situation goes down.
Ono GDKP as a whole, it is an exchange of GOLD. It is also a loot system, but a loot system that depends on gold being exchanged. Gold that can be acquired a variety of ways. Some legit and some not legit.
Very recent Blue post on GDKP being allowed, and reminding folks that even getting illicit gold unintentionally can result in penalties. A lot of people have been suspended or perma banned lately for getting illicit gold in Classic runs - because that gold is not from a legit source. Also used for money laundering.
If your guild, or friends you know, are using GDKP that may be great. If strangers are using it and you don’t know where the gold came from, be very very careful.
Also, good morning from my area of the world! Hot beverages for everyone 
