Toxic is toxic, context or not. You are judged base on your individual behaviors, not others. You don't do "he made me do it" excuse here.
like if people joke around, reference something, or other situations like that, a lot of things can look more evil out of contest
The IFS does not peek into people chatlog nilly willy every single game to look for toxicity. You only get reviewed by the IFS if there is at least one person who reported you. If your "jokes" are of crude or offensive nature and someone took offense to that and report you, then you deserve the punishment. You are in public space, not your private space. You must take into account of everyone in the game before making such "jokes". If your "jokes" are harmless enough, first of all, no one would report you for it, secondly, if the "jokes" are not offensive, the IFS would not punish you so you have 2 layers of security there...
it would even allow people to have the benefit of self defence in rare situations
self-defense.....from what? Are you or your properties in physical harm? That's the only time you can ever claim "self-defense" in the eyes of the laws. You have a mute function. That is your self-defense. Counter-flame is NOT self-defense.