I moved the big meta-level comment thread from "Yes Requires the Possibility of No" over to here, since it seemed mostly unrelated to that top-level post. This not being on frontpage also makes it easier for people to just directly discuss the moderation and meta-level norms.
Actually, I would like clarification from the LW admins on this. As I understood it, the “banned user” feature prevents the given user from commenting on your posts (and… responding to your comments, maybe? I’m not clear on this part either). I am not aware of it doing anything to prevent you from seeing the “banned” user’s posts/comments which they post elsewhere.
That having been said, GreaterWrong does have an “ignore user” feature (which automatically collapses comments from a given user). (Being GW-specific, of course, it does nothing for you if you prefer to use the official site to browse LW content.)