I'm IN for THAT! Plus an automatic message to the player that he/she is being ignored.
I would also make judicious use of a server setting to close the text box for everyone. Of course there would be a message to everyone stating the situation, yes, yes, of course.
This could easily get abused you realize. For example, you, some other dude, and me are playing. We both ignore the other dude... and we start to talk garbage about him. (Not that I am saying that you talk garbage or that talk garbage...) Well but this would give an advantage to many of these "weeds " we keep getting. Other than that, it is a pretty good idea. Except just think about the hiding everything. Player PM can be abused as well as excluding one from the chat.
you know what it should do? it should disable all talk about that player, or things involving his name so that way people don't trash talk them when they can't hear