Vinna's solution was to quietly report the offending name, which I think is a good one. The player could have been reported by anyone and this method avoids confrontation. On the other hand, it won't prevent the player or other guildies from trying again.
Another solution is to have a guild naming policy to uphold the reputation of the guild. But this could get messy, with people having to decide what to censor and what is acceptable. Censorship is always a touchy subject.
My favorite method is patience. Guildies who think offensive names are funny often have other issues that respectable guilds are unwilling to put up with and then bye bye offending guildie. Or the amusement value of a questionable name may run out and the guildie may change the name without any interference.
I know someone who named an alt after a porn star, which really irritated me. After a couple months of playing this character, he ended up turning himself in. He also got a funny story out of it because he had to make the GM google the name before he got the free name change.
Do you think guilds should police their members' names since they are representing the guild as a whole? What methods, if any, does your guild use to do this?