Like I said, if you take OOC communication options out of the game, cheating players will find ways to cheat using external means -- AIM, Skype, etc. where you lose the ability to log and to fact-check during disputes, thereby turning policy issues into he-said, she-said debates. I have seen this happen while staffing for MUDs without in-game OOC. It's not worth it, IMO.
When I run into players like those described by Pixie, if it's clear they're not simply having a newbie technical issue, I usually say, "Let's keep it IC, please." and then I stay IC and try to teach by example. That tends to nip things in the bud and signals that players can and should pursue IC information and answers ICly. I've never actually had to block anyone from tells, but I'd definitely do so if I felt I was being harassed or pressured, especially after a warning -- and I'd report the player, too.
Some suggestions for staff:
-- Update 'help tells' to mention the block and ignore commands and their helpfiles (I forgot these even existed!).
DONE
-- Create a helpfile like 'help twink' that gives good, concise examples of what players shouldn't use OOC communication for (help twink is a GREAT helpfile, even for experienced players -- I consider it required reading and I review it regularly). Also, I really like the 3rd and 4th examples in 'help crossover,' and the 4th example is especially easy to do without even realizing you're doing it.
IN PROGRESS
-- Clarify the differences between quiet/deaf and block/ignore. Help block says that 'quiet' will block players from sending you tells. Help quiet says that 'quiet' will allow tells through. They can't both be right.
DONE
-- Since osays should be used sparingly anyway, consider adding an output (deterrent) that displays to a person when they osay, such as: "Remember: osays are for helping new players with technical issues and advice only." Perhaps make this fire only in public-flagged rooms or when 3+ people are present, to allow for coaching without the spam.
DONE
Some suggestions for players:
-- Encourage your fellow players to report abuse and problem behavior to staff. Copy and paste logs to Kinaed.
-- Discourage your fellow players (and new players especially) from using osay to banter or argue in public places. When I see frequent use of osays for non-helpful chatter, it's almost always among groups of cyan players creating a positive feedback loop among each other.
-- Use the 'assist' command to send relevant helpfiles to folks who need guidance.
-- Teach by example, and use emotes to cue appropriate behavior.
-- Don't let things fester.

Complaining privately may be therapeutic at first, but if pervasive issues aren't addressed, the community as a whole can end up suffering from bad juju that eventually explodes in drama.
I'm a big proponent of self-policing, but it can be difficult even for experienced players to recognize and respond to problem behavior, and even experienced players are susceptible to twinkery and crossover. My advice is not to let yourself get flustered in the heat of the moment: think ahead about what you could say or do when you're confronted by a player who has difficulty staying IC and be prepared to respond in the way you're most comfortable with, even if that means using ignore.
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EDITS BY KINAED - Thank you, Player of Jules!