In that past, chat toxicity was actually handled by a system of ever-increasing amounts of chat-restricted games. It could start off as low as just a few games, but as people continued to cause problems, they would earn more and more restrictions to where you could consider them effectively permanently chat restricted (some players worked up to a few hundred games of restrictions). Here's the announcement post from when they stopped that and moved to the system we have today: http://boards.na.leagueoflegends.com/en/c/gameplay-balance/Boqd81O0-upcoming-upgrades-to-chat-restrictions
One of the main points that transfers over is where players who were restricted still were toxic with their few lines they were allowed to use during games. For those people, it really didn't gain the other people stuck in game with the toxic person any real help at all. From there, you could argue on why not just revoke their chat privileges entirely, which is a valid jump. In the person is still causing problems when restricted, get rid of even the limited chat use they do have. But this is where I feel the argument you stated comes in. If players are so bent on ruining the game for others, they're going to find a way. I strongly believe this. Rather than causing problems in chat, they'll be the ones who start to spam ping on top of you when you make a mistake. They'll follow you in the jungle and steal your farm (or if they're the jungler, go take all your lane farm/exp). Maybe they avoid the team and AFK farm. They might also up and decide to intentionally feed.
And to your point, yes, you could still catch these people when they do these things. The question is what you gain or lose in doing so. For the most part, you're just letting a known problem player continue to ruin games while you wait for their other behaviors to get them banned. Unfortunately, in-game actions like these are often more difficult to detect, which generally means they're slower to detect. So it doesn't really make sense to keep them around for that time.
As the system is now, a very small portion of people even get to a permanent ban. They just get a lot of publicity here on the boards as a vocal minority when they come in here claiming their permanent bans were unfair or trying to defend their actions. Truth is, most people learn their lesson from the very first time they get a chat restriction, and never get a punishment beyond that. And many players who don't get it after the first punishment, will reform after the second one. After you've filtered through 3 tiers of punishments already, very very few players who continue to cause problems will ever reform.
But beyond all that is one of Riot's core philosophies around the permanent bans. When they issue one, they're basically telling the person to go somewhere else. They don't want them here in the community anymore. While there's not really a way to enforce that an individual never play the game again (they can make all the new accounts they want), Riot truly doesn't want them here if they're going to keep acting the way they were.
