It was a seriously cool experiment. Factions rose and fell, alliances were forged, battles waged, "rules of war" developed. It was amazing.
But I don't think there's much to be gained from pontificating about it as a model for preventing hate speech.
For one, it was moderated. The slow speed of creating things just meant it was easier on moderators.
Secondly, the main thing that made it mostly pleasant was that only very widespread ideas could flourish. Minority ideas, whether good or bad, could not (even the art from small communities was only allowed to exist via alliances with larger communities that could easily destroy their art). This means things were mostly unobjectionable, but it also limits creativity. Do you really want that to be your model of public conversation? Things can only be published if 1000 people all try to publish the same thing and work to maintain it?
This would just be pushing filter bubbles to the extreme and driving resentment underground where nobody would notice it until it bubbled over. Then people would be like "whoa, where'd all the hate speech come from?", when it was there all along but not the dominant voice. And they would be making poor decisions regarding their own political strategy, because they mistakenly believed that they had won a battle that they had not.
All a model like that would do would be to amplify the status quo, whether good or bad. Just because your political faction happens to be dominant in certain circles doesn't mean you should adopt policies that always benefit the dominant political faction. Especially when your faction is all about protecting minorities. A status-quo-favouring policy would be terrible for minorities that do not already carry favour with the larger population.
When you think about whether a policy for shaping public conversation is a good idea long-term or not, consider whether it would be a good idea say, in Russia today. LGBT people in Russia are oppressed and do not hold favour with any larger political faction. "Majority gets to censor the minority" is a terrible policy in almost all cases, and people at present only don't realise this because they are in the historically improbable situation of the people with the power to censor also being the ones who favour minority voices. This is historically rare, and your policies should not rely on it being the case.