Is Psychological Warfare A Valid Strategy?

(Note: This match is hypothetical; the events in this match did not actually occur, but is based off of a real match) The match went like this:

In the early game, the enemy team had a lead due to a successful invade into our red. They got a few kills off of us, as well as the red buff. I, the jungler, fell really behind, while my friend, who was going mid Heimerdinger, faced off against a Lux (who got a double kill in the early invade). As expected due to Lux's gold advantage, Heimer was beaten in lane and, because I was so behind as the jungler, could not gank for her. In addition, the other lanes were stressed too, and could not afford to help gank mid. Because of this, and the fact that we had a strong late game comp, I stated that we should "play for late game."

During mid game, Lux became quite fed, and began to trash talk our team, saying that we should "Uninstall League after this game," and "How did I even get matched up with you bronzies." My friend became slightly discouraged at this, and I consoled him by saying that Lux naturally counters Heimer due to his immobility. I started camping mid lane because, despite Lux taking our first tower, she remained in that lane and refused to help her teammates. After killing Lux for the 3rd time in a combined teamwork, Lux began to flame at us, saying "oh, it takes two people to kill me; what a noob!", as well as other insults. Worst of all, she even insulted her own team, saying "Noob team didn't help me" while my teammates were doing a perfect job of distracting the other team

Now, this is the important part. The way I responded to Lux's insults was by saying "well, this is a team game" and "if you can't work with your teammates, then you belong in a lower division," as well as saying other things about Lux's attitude towards both my team and her teammates. When the team fights finally got around, Lux began focusing and targetting me first, which I was fine by, because I was the designated tank for my team. Because the only thing Lux ever did was focus on my team's tank, me, it allowed for the rest of my teammates to pick off the other team, allowing for an easy win in the team fight. As we began to turn the game around, the Lux became more desperate and flamed harder in chat, blaming her team for not peeling for her and saying "1 v 1 me you pssys" and the such. I'm sure that by this time, her teammates had already muted her. We eventually won the game despite the incredible lead the enemy team had on us due to me playing on Lux's ego. After the match, one of Lux's teammates said "thank god the game is over, I can't stand this salty piece of sht."

Now, my question to you people who stood here and read this essay, is psychological warfare a valid strategy, or is it counted as verbal abuse? In my case, goading help lead Lux to make bad decisions, and thus throw the game. Other cases of psychological warfare I've seen in play on LoL is forcefully placing a person on tilt (looking up their match history, then camping their lane) and encouragement of "typefests" with their lane opponents, in which the person engages on the lane opponent while he/she is typing. Based on all of this, is psychological warfare a good thing, or can it be reported for verbal abuse? Please vote!

~From a Mid-Gold player.