What happens when a player is reported? It says it will be reviewed, does that mean if the devs think it necessary to ban him, they will? Has Anyone who's ever reported someone seen something come of reporting the player?

It sends a message to the devs to alert them to take a look. They will then take the action they deem appropriate. I don't think you will receive notification of what happens but there have been incidents in the past where players have been banned for a range of reasons including abusive/offensive behaviour in the chat.

I've seen it before. The devs are definitely on top of those sorts of things.