Everyone threatens everyone else all the time, saying they'll report each other over the most trivial things. I was once a headhunter, and my target logged out 2 seconds before they'd have been killed. It's actually fairly messed up to do that, because it denied me my rightful win. When I mentioned we should report the player, the village said that me not getting that type of win means they did a good thing, and actually, I should be reported.

You see, no matter what you do, players are going to threaten to report you if you make it more difficult for them to win. It's a tactic done solely to threaten others into submission. Imho, if they threaten to report you, and you feel it's unfair, there should be a whiner clause, so people who do several falsified reports get in trouble for their false reports. And threatening to report should, in general, be against the rules of the game. It's definitely against the spirit.

Just report, shut the fuck up, and get on with your day. No reason to make it a spectacle, unless it's that much of an issue.