Perhaps there's a middle ground here to be made, disabling chat by default on the event and allowing people with a warning check box with a caution that chat can say anything. This way the general consensus is that people are removed from chat unless they specific want to join a warning chat and wouldn't have to default look onto the arguably atrocious chat. This is a place where people who want to troll and say what they want or act look hooligans can be grouped with like minded hooligans and share their merry ignorance together away from everyone else without being utterly ignored.
Racism, sexism or other discrimination based behavior that is either baseless or inaccurate is just that, foolish and baseless and those who sincerely believe in it clearly have a false perception of the world. However, it feels inherently wrong to tell people they can't think or feel a certain way, while comments should be directed else where, completely silencing a group of people because they disagree with the majority of people and viewing them as inferior or lesser people is imo on par with the ignorance of racism itself. I'm not suggesting we be tolerant of the act itself but suppression and witch hunting is a bit extreme, especially permanent IP bans or people suggesting you register your address to join the chat. Angering people or provoking them might even encourage them to spam more offensive things knowing they are getting attention and tricks like using a VPN to avoid IP bans and making new accounts circumvent the current system. There really is no flawless and/or perfect utopia of chat as long as people disagree about issues but perhaps something will improve.
A way to clean up chat and let trolls have their own space away from everyone else seams lie a fair compromise. If we start being the thought police and weed out everyone who thinks differently were going to have an Orwellian experience and I'm sure it will drive the popularity of the site and events down. That being said I still sympathize with the people who have been offended and feel wronged. It isn't right to judge people on their out of control attributes but the nature of people being offended is complicated. What people find racist, funny or offensive is subjective in a lot of cases. There's also a big difference in actually being a racist who believes your words and being a hooligan who just says offensive things to get attention or try to be funny. Yelling the N word in chat is offensive and pretty insensitive of other's feelings (disregarding past tension also) but at least from my perspective it isn't racist.
However as a business maneuver it's very good PR on Blizzard's behalf and will at least make the company look pretty good. It is common practice in the business world to self police and as long as Twitch and Blizzard agree on these terms for their event, they do have every right to do this. The question though is should they? Let's hope it's enough to appease everyone and strict but not brutally harsh.