After much inner debate over this subject I have come to the conclusion that the lack of policing in WoW is good. I have had my fair share of assholes over the years, and at times wish there was some secret GM lurking around watching all the unsavory bits that float through trade chat and slamming discipline down upon the wrong-doer, but alas there is not. At least not when we wish they were looking.
So what do we have? Well let's see....
We have the secret police. Those that we turn in via the spam-o-matic button and it's a secret if anything actually happens.
We have the spies. For those of you familiar with the Moon Guard/Goldshire brothel fiasco, Blizz does indeed put people out there to take notes and dole out bans as needed when enough people have complained about a particular area or server.
We have the FBI. Where you can officially turn in a specific person for doing something against the TOS. Usually harassment, bigotry, or hatred remarks. In my 6 years of WoW I have used this function twice to report a specific person.
Other than that, Blizzard has left a remarkably large terrain for us to police ourselves, and given us a set of tools to use.
Turn it Off - you can turn off all or some of your chats including Trade and General.
Ignore - If you have one or two hundred specific people you don't like you can ignore them. One of the additional wonder features with ignore is you will never get grouped with them. Though beware of the alt.
Spammers beware - you can report as spam. This is generally reserved for gold farmers but I have used it when I have reached my limit on anal jokes. I just begin reporting. Sorry, but I use trade and I don't really want to see your ass jokes. If that's the tool I have to get you to stop then I will damn well use it. Hopefully you will get the message and a short ban.
One of my favorite tools tho is the pa-troller. One of those people who love to troll the trolls. We have one in my guild. He does not use foul language or anything he simply changes the subject. It is quite funny to see and I've helped him on more than one occasion. If you get a couple people singing or saying Ninetails for long enough the ass jokes disappear.
This is one of the best examples of self-policing I can give. That there are people who will take the initiative to derail the idiots in trade and make us all laugh for a few minutes. It's priceless.
So there you have it. From the no frills all rules person I say...no police! We seem to be doing ok on our own with the occasional smack down from on-high.