MS as a company is just enforcing a similar ruleset that I've seen on private servers in PC gaming for a long time now. Don't bother fighting it, just change your attitude about swearing and stuff, it's hard at first, but you quickly realize it is not worth it to struggle against the inevitable.
It's not MS or the Xbox wing of MS that is being problematic, it's merely a growing change in our culture and MS is trying to appeal to people who want a clean experience. Sony has similar rules, but maybe does not actively enforce them as strongly. When I was a bit younger I was a pretty rowdy person online with a dark/offensive sense of humor that was mostly satirical, it used to be people loved this type of humor, now it's been thrown out with yesterday's garbage and you get in trouble for it very easily, even if all you do is drop a few F bombs.
So my advice is just learn to accept the changing social rules, things are a lot easier that way. You can still own people by getting under their skin passively aggressively, anyway. And if all else fails, out scoring them always speaks for itself. Me, personally, I just try to keep quieter in games now and just play.
However, no profane language bothers me, so when I hear other people on a server acting out, I understand them, and I can't imagine how petty someone would need to be to actually REPORT THEM instead of just ignore it, but that's life, those people who report you will always be willing to do so, the only way to avoid it is to give them nothing to report.
