Should this be allowed?
As long as that's related to chat moderation, I guess it was allowed because that statement has not been reported.
Can we please either remove this badge (which promotes cruddy posts) or change it so that it does not promote this behavior?
Why so? Are you totally straight? Do you think a Badge is something positive? Don't you believe that the number of Badges you have just show what a fool you are spending your life's time with a webbrowser game called Stackoverflow?
Seriously, I think there's a line you should not cross and it starts when you take badges too seriously. Badges are something weak, subjective and just bound to some statistics. It's for the fun of the game.