We had a pretty in-depth conversation on this whole thing in the chat but, I figure it's worth it to put my opinion on the matter here. Buckle in, it's probably going to be lengthy given my penchant for rambling. 
The main crux of this argument is, from my understanding of the chat conversation, the concept of a "fully immersive RP environment." A situation that you can see and interact with any RP situation that is openly set in front of you. You see someone having a drink at the bar, you join them. You overhear a dastardly plot, you jump in to help/interrupt it! The entire RP world is your oyster to partake in.
While that's still technically true, it's also not the whole truth. Especially with a community as large as Balmung (and even among smaller communities), people are going to have personal preferences on what they want to RP and what sorts of situations they're willing to RP with. A good example of this is just to ask yourself and those you know what type of characters they're playing.
Are they playing a Warrior of Light? Are they playing some gritty, down-on-their-luck street urchin? Are they playing an ancient Allagan bioweapon who has accidentally reawakened and somehow has a penchant for hanging out in bars? Someone RPing as a major NPC? A traveler from another world - such as FFXI or another setting entirely?
Next question: how would your (or their) character react to any of the characters above? Especially ones that are outside the realm of play that you/they are comfortable with entertaining. Would you ignore them? Or would you engage them and simply assume that their character was crazy or a liar? Now, turn that on its head - what if you were RPing with someone who did the same to you, waving off your character's claims because they were "unbelievable" to that player?
Is one way of play really wrong compared to the other? If so, where is this hard-written rule of How One Must RP? Or is it simply more of you trying to enforce the type of RP you're comfortable with and/or want to see? Because, technically, the beauty of RP - and storytelling in general - is that there aren't set rules like that. You can technically tell any sort of tale you want with whatever characters you want.
Sure, people can cite common RP no-nos - no power-gaming, no meta-gaming, no lore-breaking - but these are all, in truth, simply more concessions in order to get along with other RPers and try to make it a more fun experience for everyone. If you play One Punch Man Comes to Eorzea and take out everyone effortlessly, there's no RP Police that's coming to bust down your door and arrest you. The worst that will happen is that you may find difficulty in finding someone willing to RP with you.
But that - I believe - is the beauty of a massive RP population like on Balmung (and why it remained the go-to up until SE straight up kept people from getting onto it anymore): there are so many RPers that even your One Punch Man could find a group willing to RP with them - though it might take some time and effort some may not be willing to put into it. However, toning such things down and following more of the RP "guidelines" simply means more chances to find someone willing to "accept" and play with your character.
That's generally what that popular, somewhat passive-aggressive statement so prevalent here on the RPC stands for: "You can RP what you want, but people might not RP with you." Translated, to me, it means: "It's not something I want to RP with." And, shockingly, that's okay. You don't have to make a character that pleases anyone - simply one that makes you happy and, hopefully, amongst all the masses you can find others with similar mindsets.
A bit tangential, but it circles back to the point at hand. You have all these differing styles and levels of "power" and preferences and goals going on independent of one another. So what happens when these different circles interact? Such as in the situations raised - that of coming across someone in public RP?
You find two thieves openly bragging amongst themselves that they just robbed and murdered some wealthy merchant. Something must be done, right? Well... you would think, but! Keep in mind that the only person whose RP you have any control of (and really, any right to control if you want to think about it) is your own. You cannot and will not have the authority to tell others how they "should" RP, you can simply enforce your preferences by RPing with those of like minds.
If you just step in and seek to enforce your RP will on these two braggarts... is it technically any worse than someone claiming to be the love child of Shiva and Bahamut trying to force you to accept their style of RP? An exaggeration, perhaps, but at its simplest it's the same concept: their RP doesn't mesh with your RP. And that's okay - again, the beauty of large RP groups is that you're not forced to RP with these people! You can go find something else.
But maybe these thieves WANT to be stopped, maybe they're doing this BECAUSE they want someone into interact. That's certainly a possibility. However, since it is not a KNOWN thing, the oft-suggested idea of "asking first" is paramount. Send them a tell, see if they're willing to have you to step in. After all, this is you seeking to impose on THEIR RP - whether it's in a tucked away location or the middle of a populated city. They are under no more compulsion to accept your addition to the scene than you are to accept Shivhamut or One Punch Man waltzing into YOUR RP scene.
Maybe it'll work out - they'll agree to have you jump in and the result could be an engaging experience! Or maybe (if, for example, their goal for their RP is to have a power fantasy of having the always successful, smug thief type who always gets away and always has a quick, witty quip) they'll end up forcing a situation where they get away anyway, rendering your efforts moot. Or maybe your character will end up in a power bracket beyond theirs and it quickly turns into an OOC argument on how your character is power-gaming theirs. Or they could just let you know that they're not wanting any intervention - be it because they're "technically elsewhere", it's part of a closed-circuit RP, or they just don't want someone else coming in and potentially "ruining" their scene. Or they just ignore you and you move on.
Sure, in the latter cases, folks have said that this sort of situation could be circumvented by the people just having their RP in party chat or other closed-circuit environment. But, again, they're under no obligation to do so - just as you aren't. Maybe they think party chat is for OOC stuff - maybe they like using emote actions, which can't be done in party? It's simply more of a concession to the "benefit" of others, not a hard-written rule that must be followed.
So, what can you do? Well, technically, you can still do whatever you want. You can seek to interact with them - but they're not obligated to accept you or what you want to do with the scene. You can seek to let them know OOCly what you feel they "should" be doing - but, again, they aren't obligated to follow your advice. Or you can go find RPers more suited to your preference of play amongst all the many others on the server and let them do their own thing. Worse thing I can see in that case is they could come posting about how no one wants to RP with them.
Ultimately, the choice is yours. And theirs. And everyone else's.
Or something like that. I'm sure I lost track of what I was saying and trying to convey at some point during this wall of text. Maybe there'll still be something worth gleaning out of it.
The main crux of this argument is, from my understanding of the chat conversation, the concept of a "fully immersive RP environment." A situation that you can see and interact with any RP situation that is openly set in front of you. You see someone having a drink at the bar, you join them. You overhear a dastardly plot, you jump in to help/interrupt it! The entire RP world is your oyster to partake in.
While that's still technically true, it's also not the whole truth. Especially with a community as large as Balmung (and even among smaller communities), people are going to have personal preferences on what they want to RP and what sorts of situations they're willing to RP with. A good example of this is just to ask yourself and those you know what type of characters they're playing.
Are they playing a Warrior of Light? Are they playing some gritty, down-on-their-luck street urchin? Are they playing an ancient Allagan bioweapon who has accidentally reawakened and somehow has a penchant for hanging out in bars? Someone RPing as a major NPC? A traveler from another world - such as FFXI or another setting entirely?
Next question: how would your (or their) character react to any of the characters above? Especially ones that are outside the realm of play that you/they are comfortable with entertaining. Would you ignore them? Or would you engage them and simply assume that their character was crazy or a liar? Now, turn that on its head - what if you were RPing with someone who did the same to you, waving off your character's claims because they were "unbelievable" to that player?
Is one way of play really wrong compared to the other? If so, where is this hard-written rule of How One Must RP? Or is it simply more of you trying to enforce the type of RP you're comfortable with and/or want to see? Because, technically, the beauty of RP - and storytelling in general - is that there aren't set rules like that. You can technically tell any sort of tale you want with whatever characters you want.
Sure, people can cite common RP no-nos - no power-gaming, no meta-gaming, no lore-breaking - but these are all, in truth, simply more concessions in order to get along with other RPers and try to make it a more fun experience for everyone. If you play One Punch Man Comes to Eorzea and take out everyone effortlessly, there's no RP Police that's coming to bust down your door and arrest you. The worst that will happen is that you may find difficulty in finding someone willing to RP with you.
But that - I believe - is the beauty of a massive RP population like on Balmung (and why it remained the go-to up until SE straight up kept people from getting onto it anymore): there are so many RPers that even your One Punch Man could find a group willing to RP with them - though it might take some time and effort some may not be willing to put into it. However, toning such things down and following more of the RP "guidelines" simply means more chances to find someone willing to "accept" and play with your character.
That's generally what that popular, somewhat passive-aggressive statement so prevalent here on the RPC stands for: "You can RP what you want, but people might not RP with you." Translated, to me, it means: "It's not something I want to RP with." And, shockingly, that's okay. You don't have to make a character that pleases anyone - simply one that makes you happy and, hopefully, amongst all the masses you can find others with similar mindsets.
A bit tangential, but it circles back to the point at hand. You have all these differing styles and levels of "power" and preferences and goals going on independent of one another. So what happens when these different circles interact? Such as in the situations raised - that of coming across someone in public RP?
You find two thieves openly bragging amongst themselves that they just robbed and murdered some wealthy merchant. Something must be done, right? Well... you would think, but! Keep in mind that the only person whose RP you have any control of (and really, any right to control if you want to think about it) is your own. You cannot and will not have the authority to tell others how they "should" RP, you can simply enforce your preferences by RPing with those of like minds.
If you just step in and seek to enforce your RP will on these two braggarts... is it technically any worse than someone claiming to be the love child of Shiva and Bahamut trying to force you to accept their style of RP? An exaggeration, perhaps, but at its simplest it's the same concept: their RP doesn't mesh with your RP. And that's okay - again, the beauty of large RP groups is that you're not forced to RP with these people! You can go find something else.
But maybe these thieves WANT to be stopped, maybe they're doing this BECAUSE they want someone into interact. That's certainly a possibility. However, since it is not a KNOWN thing, the oft-suggested idea of "asking first" is paramount. Send them a tell, see if they're willing to have you to step in. After all, this is you seeking to impose on THEIR RP - whether it's in a tucked away location or the middle of a populated city. They are under no more compulsion to accept your addition to the scene than you are to accept Shivhamut or One Punch Man waltzing into YOUR RP scene.
Maybe it'll work out - they'll agree to have you jump in and the result could be an engaging experience! Or maybe (if, for example, their goal for their RP is to have a power fantasy of having the always successful, smug thief type who always gets away and always has a quick, witty quip) they'll end up forcing a situation where they get away anyway, rendering your efforts moot. Or maybe your character will end up in a power bracket beyond theirs and it quickly turns into an OOC argument on how your character is power-gaming theirs. Or they could just let you know that they're not wanting any intervention - be it because they're "technically elsewhere", it's part of a closed-circuit RP, or they just don't want someone else coming in and potentially "ruining" their scene. Or they just ignore you and you move on.
Sure, in the latter cases, folks have said that this sort of situation could be circumvented by the people just having their RP in party chat or other closed-circuit environment. But, again, they're under no obligation to do so - just as you aren't. Maybe they think party chat is for OOC stuff - maybe they like using emote actions, which can't be done in party? It's simply more of a concession to the "benefit" of others, not a hard-written rule that must be followed.
So, what can you do? Well, technically, you can still do whatever you want. You can seek to interact with them - but they're not obligated to accept you or what you want to do with the scene. You can seek to let them know OOCly what you feel they "should" be doing - but, again, they aren't obligated to follow your advice. Or you can go find RPers more suited to your preference of play amongst all the many others on the server and let them do their own thing. Worse thing I can see in that case is they could come posting about how no one wants to RP with them.
Ultimately, the choice is yours. And theirs. And everyone else's.
Or something like that. I'm sure I lost track of what I was saying and trying to convey at some point during this wall of text. Maybe there'll still be something worth gleaning out of it.
~