As the co-owner of the other sever who's name abbreviates to "NB", I can officially say that this post gave me a heart attack. XD I was about to message you in a frenzy asking where this came from, since I run a very filtered and logged PG-13 chat...
Anyways, as someone who is really against this kind of stuff I can sympathize with the request to remove this server, but it is true that there are no specific regulations for server content, other than running PK Core and being reasonably up to date. Sadly, there are players who love/like that kind of an environment (I've met a few myself) too.
That being said, I think that the community could benefit from a 'disclaimer' of sorts at the top of the server list page, something like "The content provided by these servers is not sponsored by Project Korra. Content is subject to the discretion of each individual owner and is not guaranteed to represent any set standards." (A much better statement can be written officially
) I know that it is implied, but sometimes people need to see that in writing.
In general, the best thing the community can do is simply not play on that server. If you know others who are looking for servers, you can also refer them away from this server so long as you can present them with reasonable evidence of why they should avoid it.