[Mod Edit - Abbreviated profanity, profanity and profanity that is disguised but still alludes to the words are not permitted - D]
And regarding the First Amendment; Microsoft is a privately held enterprise, and Xbox LIVE is a service it provides. As a non-governmental body, the company may choose what is and is not acceptable on their service. You agree to those terms when you sign up for an account on Xbox LIVE.
If you have concerns, contact Turn 10 by email at firstname.lastname@example.org.