Get more GM's. Or allow support to monitor world chat.
I have a different idea:
Have less GM's, and instead of only moderating certain people, only intervene when it's actually necessary(and by intervene, I mean handing out a warning in private, not arguing in wc like sky/neith do; only after they continue should punishment be handed out). This game thrives on drama and conflict(as do all pvp based games), preventing it from happening is no way to be.
Sure, people like "Nigger" obviously need banned. The countless "Xpend-parody" names should probably be banned(although, no one in our guild really cares, we only pick at it because it's randomly a rule now). Others like LEDiable, AlicE, Mordentia, Ultimate, and Ryan could all use mutes every now and then. But a majority of things said are very mild and only offend the abnormally emotional.