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I'll give an example from one of my own projects to highlight my point. Another dreamer commented on my recent mecha shooter "Pretty epic except the awful aiming sensitivity makes it unplayable". To my eye, this is petty and mean, but doesn't violate terms of service - they didn't use a slur, they make a threat, etc. When I report content to Dreams' formal moderation process I try to be careful to ensure the content I report is actually in violation of community guidelines and TOS.
However, anyone who sees this comment is obviously gonna assume the Dream is terrible and not worth their time. When small creators like me get low views and plays even on my most popular creations, and this is now and forever forever the first comment any player sees, it's gonna drive away players.
I propose self moderation as a middle ground. It won't tie up moderator's time with frivolous complaints, and gives us the ability ensure our content is presented in at least a slightly flattering light.
As for blocking, it doesn't hide their content from other users. My issue is not that they hurt my feelings (this guy is clearly an ass), it that one comment can torpedo hundreds of hours of work.