I think it's fair enough to have standards of what you are willing to host. But if you're trying to run a business, and have hundreds of thousands of users who've spent years building the communities that give your site its value, you'd be an idiot not to listen to them (and morally owe them consideration, IMO).

Some LJ communities have rules I regard as ridiculous, but I know that if I choose to join them, I have to abide by those rules - and if enough of us think they're stupid, the mods can change them or we can go start our own comm. But they don't charge me money, and leaving them doesn't entail abandoning a huge network of friends.

LJ has never been much good at negotiating the grey spaces, and giving people the benefit of the doubt, I think that's my main problem with it all. Plus the way their rules are never entirely clear, and the disastrous way they chose to handle all this.