The internet is a community in the same sense that Manhattan is a community. It isn't. The internet is a MASSIVE place with many communities inside it.
And judging the sprawling metropolis that is the web by /b/ is like judging the United States by an insane Neo Nazi jacking off in someone's basement. Furthermore, you can't hear what they are yelling about unless you go to that basement, I.E. /b/. Just like you don't go to certain parts of a city unless you are a very specific type of person, you also don't go to certain parts of the web.
Also, you fully misunderstand why they did the stuff with 9Gag. It had nothing to do with looking better, it had to do with them finding it very, very funny.
In terms of XBL........ Yeah, there are a LOT of shitty people and there isn't really an excuse for it, since unlike 4chan, it isn't a closed area. The one defense I can offer is that not ALL people are like that. In fact, it is a fairly small number. It's just that they are VERY vocal. And while those experiences are the ones that stand out, more often than not, I find decent people.
Now I know I'm going to get some kind of backlash for this..... But I need to say it anyway. Unfortunately, Free Speech is pretty much all or nothing. You want to be able to protest something? Then the WBC get's to exist. Same thing with the internet. Once you start allowing censorship to take place, it isn't going to stop. Now, I fully encourage people on places like XBL to take their OWN initiative to clean things up.
Final Note: Don't worry so much. You aren't going to "Lose" the internet because some people on 4chan called someone a fag. You just aren't.
EDIT:
Rastien said:
But what is freedom?, surely true freedom enables people to be total dicks but at the same time enabling people to do some really incredible things.
Everyone has differing views on what freedom is, now i don't agree with what these people do not in the slightest but in my opinion that is what true freedom is, you have the very best humanity can offer with the very worst counter balancing it.
I don't actually have an answer to this really, it's more just the conundrum in my head
This. Right here. This is the best made point in the entire thread.