What is the purpose of the mute button?
To give players the capability to mute someone whom they don't want to hear from anymore despite the negative affects it has on their teamwork. It doesn't take back what was said previously, it's not capable of time travel.
For the sake of the game integrity the player is still obligated to work with someone that has made it clear that they're being a jerk. And working with a jerk isn't exactly an enjoyable experience.
You say that muting stops all negative interaction with the other player but that's rarely the case. I see angry people go to great lengths to harass someone especially when they think they've been muted or are being ignored. Spam pinging, griefing (ranging from minor to major), constantly asking people to report, and so on. Anything that they can think of that will upset the other player.