You misunderstood me, I said she's quite respectable on the show Dropped Frames where she's being sincere and offering solid opinions in a mature and serious debate with other female streamers. Of course her Stream doesn't paint her persona as respectable, that's part of her stream's... uhm... charm.
You're raising a lot of issues here with subjective opinions. Let's just begin with the first you raised. Should people be banned in the game for their streaming content? You took HotshotGG as an example, but Hotshot is involved with the e-sports team Counter Logic Gaming which means Riot can ask him to uphold some level of professionalism because the team is contracted and has to abide a code of conduct. Kaceytron is just an individual and all of her "offensive language" is contained on a third party platform that doesn't actually affect any of her gameplay and she's in no way representative of professional League of Legends.
Your second issue is where the line starts to get reeeaaally blurry. What does it mean to play bad intentionally and how punishable should it be? Is it not playing as good as you think she could play? But now you're not dealing in something objective, it's subjective---you're personal opinion. This isn't something League's system can actually detect and prohibit. That would require a moderator to actively investigate that player's behavior in-game, which would bring about a whole set of new problems. You can't just single her out as you have to rule on an actual policy enforced on everyone.
Kaceytron is smart in the sense that she's using the systems in a clever way that allows her to be provocative without crossing any lines. The thing to understand here is that Twitch has a much lower standard than League of Legends does, there's more tolerance and room to build a personality. The way you should be looking at it is to mute her stream and only look at her gameplay (however hard that is when she fills half the screen with her boobs), then you can see how she actually behaves in-game and it's not as border-breaking as you make it out to be---it's purely her Twitch attitude which drives you to think she's being toxic/intentionally feeding.
Both Twitch and Riot know about Kaceytron and she does get really frequently reported (especially on Twitch) but both Riot and Twitch has estimated that she works within the boundaries of the code and won't ban her because of the player hate on her (something about minorities and singling people out---you know, professional ethics). She's not breaking any rules like you claim because she would have been banned ages ago if that was the case (unless you're claiming Riot intentionally ignores her, in which case I'll reward you a tinfoil hat).