It won't happen again. However, I don't see anything that would lead to me banning him, as I did see some nasty comments from other people. Ill have a talk with him and get his side of things next time I see him online. I can see a valid argument for a mute considering the rules some other servers have on insults and things of that nature. I will make a final decision after I have spoken with him.
I did see some very xenophobic comments from players when this happened, I can post the chat log... but its going to be more players than luke with egg on their faces :)
I don't have any explicit rules about insults, and do not agree with this action.