I heard about this crackdown while on Wyrmrest Accord, last night, actually. It's not surprising, though and we really can't compare ERP in Goldshire inn on the moonguard server to ERP anywhere else on Moonguard and certainly not on any of the other RP servers(It is THAT bad).
Though, it's about time. There were stories of a pedophile guild or something along those lines harassing pre-made "underage" characters. Mind you, this is only gossip but it wouldn't surprise me, knowing that particular area. I could barely click on quest giving folk in the Lions Pride inn on my low level mage on Moonguard because of all the naked level one characters offering sexual favours for a copper.
I voted "Yes, between consenting adults" because most people know to move out of densely populated areas to perform whatever they will. Smaller romantic things are no problem, either, due to character maturation that kissing or holding hands can bring.
Those doing the crazier things are just trolls and should be treated as such(Mass ignore and spam-ban).