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I think that the second question has a very obvious answer, which is no. Modkills can throw off the game balance and thereby reduce the enjoyment for all of the players and taint the victory of a team that clearly benefited from a modkill. They have comparatively little impact on a player that's already been removed from the game. Modkills should be used as a last resort for game integrity problems which cannot be resolved with a substitution.
Very surprised to hear that from you. If a players breaks a rule and heavily spews themselves villager in the process, modkilling is superior to subbing out. Would you rather compensate the wolves by giving them, say, a vig, which would result in them killing another clear player that did nothing wrong? Isn’t it much better to remove the offender?
Or maybe you disagree with the premise (i.e. that, if a player says a banned word whose utterance will result in their removal from the game) they are overwhelmingly likely to be a villager?
At any rate, game mods should obv be able to decide the best course of action for themselves (if the r-word rule is introduced, that is, but at this point, this seems quite likely to happen) but I think that modkilling here is clearly the superior solution. Yes, killing off a slot is unfortunate, but leaving an illegally cleared slot in the game is the worst option.