being that Joe shape changing was not malicious

This is getting speculative, but you know this how? That Joe was smiling and claiming it was honest fun that had unintended consequences can't be taken as 'case closed'; he shapeshifted into Bill's character and uselessly harassed NPCs for seemingly no purpose but to hurt Bill's character, and I'm guessing he claimed he didn't remember that he was polymorphed into Bill's character, but then why was he pretending to be Bill's character in the first place?

You are overlooking the possibility that Joe intentionally did this and is just pretending he didn't mean to do any of it, when I'm not seeing how that happened. Narcissists and liars exist, and bullies don't out themselves as "Yes, I'm doing this bad thing to someone knowingly and intentionally". They smile innocently and claim they had no knowledge of what they were doing, with feigned surprise and bemusement at the situation.