"Freedom of speech"
I lol'd. Riot is a private company. Have you read the terms of service? You know, the thing that you have to accept every single patch? To paraphrase, Riot can ban you for whatever the fuck they want.
"to ban someone for what they are doing OUTSIDE of the game is just hilariously wrong"
No, it really isn't. IWillDominate is a competitive LoL player. He's supposed to be a pillar of the community. In this case, Riot's powers do "reach into the real world", if that's really how you want to phrase it, because of the Terms of Service. (See above.)
"it has been proven that players go there to punish everything regardless of if the 'victim' actually spoke at all"
Since the introduction of the Justice system (and the removal of IP gains), insta-punish rates have gone down significantly. Riot's made several statements about this. Also, you say "proven". Proven by whom?
I'm very glad that they don't leave pro players out of their punishment system. Bravo Riot!