It's generally considered good form to NOT RESPOND AT ALL, as a response could potentially be turned against you. It's generally safest to just:
- mute,
- report,
- and move on.
Regarding whether the quick chat can be used in a toxic manner, I think the answer is obvious - yes it can. Can you be reported for it though? That's definitely a question that I think can only really be answered by specific Rare employees or the Xbox Live Enforcement Team.
Personally, though, SoT is nowhere near as toxic as other games where quick chat is used in a toxic manner. Take Rocket League (another game that I like to play), for example - its quick chat is purposefully designed to have double meanings. Just some examples:
- Nice shot!
- What a save!
- Okay.
- Wow!
Etc.
Because of how it's setup, and the frequent frustration of numerous players paired with randoms, the quick chat is almost exclusively toxic, which makes it incredibly hard for those like myself who are genuine. I kid you not, players in that game will straight up quit the moment you say anything. And this is despite being genuinely friendly and only trying to help. They take it as an insult, and will immediately impede your ability to win as a sort of pseudo punishment. Even worse, they too have a mute function available to them, but they pretend like it doesn't exist. 🙄
Rocket League is an amazing must-play game, IMO, but its community is just complete garbage.