OP, I applaud your disdain for racism and the willingness to act. I have learned over the years that when reporting anything, anywhere, you will poison the well if you interact with that person in any way shape or form, and that people with a broken moral compass will use that as an excuse to make a false equivalency argument and get you, the reportee, in trouble.

It's best to just smile, be nice to them, and report them in a highly detailed fashion for every wrongdoing that they have committed. If you were nice in the exchange, it's going to go much further.

Also, for real, screw racism, and all the racist wow players that seemingly have taken root in the community in the worst way in recent years.