I don't like playing online with strangers for this reason. If I'm playing say, Counter Strike Source, or Battlefield 1943 (which typically draws a heavy male audience), if I talk into my mic, I get verbally harassed to the point where I cannot enjoy my time playing. I have to quit and find something else to do. In home, I had to make a male avatar to keep the dudes that enjoy using the Running Man emote directly behind my avatar (so it looks like I'm being butt-humped).
Is what was described happening in Home sexual harassment? I'd say it's a gray area. It's definately harassment, but sexual? Mmm, no. Home allows users to report and block text from users. But nothing about their avatars interaction with yours. Personally, I'd say if you block them, your avatar should just disappear to them. So they cannot see you to harass, and you cannot hear their snide statements.