Not touching on all the pissing and moaning from the usual suspects or anything approaching the philosophical, if sheepy told his lawyer that he was going to treat player servers as an extension of the game space, his lawyer would probably beat him to death. The liability implications are terrifying, even behind an LLC. The fact that he allows players to link to outside discords already is an absurd amount of risk. There is a reason Steam has a pop up every time you click a link that takes you off site. It's to get the disclaimer in front of your face.
The solution is simply more of the current moderation. Sheepy has a system but it seems to be lacking the personnel to implement it. The only change in moderation I would suggest is faster bannings of obvious bad actors. If someone only posts in drama threads and has a order of magnitude higher ratio of rule breaking posts than the average active player, they can pretty safely get pushed out the door faster. Same goes for repeat offenders who do things like, I don't know, come back to the report where they were given a warn to do the exact same thing they were warned for.