That "hate speak" is technically banned on xboxlive. If people have a problem with it, they should report it to the moderators, I know it happens often enough and I know one of the moderators.
As for people thinking its not a problem, thats gray area right there. Sure you can say whatever you want until you get punished and sure it might distract your opponent, but kids shouldn't have to hear that shit. I happen to agree that it's not cool to be doing all of that. It's not in the proper etiquite.
I wouldn't talk like that on here, to my friends or to people I didn't know. And yeah, xbox live has been abused to get at children.
The rest of you can gloss it over as much as you like. "Its just a game" or "Its just the internet", but when it comes down to it, its nearly the same as having contact with these people in real life. Systems do get abused, all the time, and not all of it is "just a joke." There is a point where it crosses a line. Is that to say video games are evil? No. But some of the people playing them certainly have questionable morals.
Tell me that a kid won't be effected in some way by hearing that and you are a fool. The way he is affected will ultimately depend on who he is, the environment he lives in, and his belief structure.
I think the news broadcast was biased, I think it wasn't presented in the best light, but I believe it raised real concerns of real people. It has it's point; its a valid point. Perhaps instead of taking it as an attack, it would be better to take apart the argument, think with one's own head and accept the small truths that are there.
Video games do influence people, and so do the people that play them, and not always in a good way. And yes, the parents are partially at fault, though they don't hold all the blame.