No, those things are not allowed. I cannot tell you why the player has not been banned, only that the Boards are filled with hundreds of posts from players banned for saying them proving that Riot does in fact ban for them. If you reported him very recently, as in the match before the one he just joined, it's possible that he jumped immediately into a match and the system won't ban him until after. I cannot say for sure, as I don't have access to Riot's system to know exactly what is happening with that player's account.
And as far as your own smurf, you cannot compare the two toxicities. Your smurf was banned because of the amount of toxicity that accumulated on it. It's entirely independent from what anyone else says or does, and newer accounts are often judged more harshly due to the high percentage of them being smurfs.