If dragonfucker doesn't want to be known as dragonfucker, then they need to make a new account. And if the name dragonfucker is offensive by itself then the user with that name needs to be banned.
After saying both that they didn't know if they changed the display name, and that the team is more than aware of that person. Bullshit, you can't have it both ways.
Is the mod is saying the offending user changed the comment to reflect the target's username or that the target changed their username to justify the offenders comment? If it's the former, there might be something we're not seeing.
You just have remember, most of these guys created subs so they could be mods, not because they wanted a place where a community could coalesce and discuss ideas.