If I call somebody my personal slave because I genuinely believe that they should be my slaves they are still insulted and repulsed. It's not up to the speaker to decide whether or words are insulting to them, it is all up to the recipient's reaction whether or not something is insulting.
However, the recipients can be overly sensitive and can be offended if you ask them to stop pushing. That is why a system is in place that detects if what you say is actually insulting. This way the most idiotic reports still get killed of.
If the recipient considers it an insult and reports you and the report system agrees, it is punished for a good reason(acceptions probably still exist). You both insulted people and were determined to actually have said insulting things. KYS is one of those.
You are a subjective being(like all of us), you have opinions and others might agree or disagree with you. In public, you should be mostly free to voice your opinion. This is a game however and sharing with them how you think about them is not something that other people are there to hear. If you get banned for telling people to kill themselves, the ban is justified, no matter what context, because this game is not the time nor the place to discuss other peoples life decisions.
TLDR:
It is bannable because:
- It is still offensive
- The reporting system deems it offensive
- The game is not meant to be a platform for your speech, it is meant to be a game.