Posted by Dusty

Not really, this is very unlikely. How will they know who has their filtering on and who has it off? I have seen quite a few MMO's that employ clientside filtering and the amount of swear evasion I see in the games are almost nil. When you don't SEE your swears get filtered, you no longer have a desire to avoid the filter.

Clientside filtering needs to be transparent. So:
1) It wouldn't filter your own chat, even if you have censoring on. Why? Because YOU'RE the one typing it, so there's no point in filtering your own text. This means even if you have filtering on, you wouldn't be aware if it was filtering it for others or not. This greatly decreases the desire to avoid the filter.
2) There would be absolutely no way to tell if someone else is filtering your chat or not. Along with the first point, filtering becomes a very background thing that only helps those who WANT it to help, and doesn't drop hints to other players who is filtering and who is not, and if even their own chat is being filtered. They don't need to know, as it's about what OTHER players see, not what they see.