No one cares about revenge, except maybe Meizhen. This is about neutralizing him as a threat. That's explicitly what Ling Qi is talking about.
I'm not sure I understand what you're trying to get at with that quote? I mean, Ling Qi is not trying to get revenge against Yan Renshu, it is Yan Renshu trying to get revenge against us. That is what makes him a threat we need to neutralize. We don't know how far he is planning his revenge, how far he is willing to go, and how to protect ourselves against him without going on the offense.
Unless you are saying that Yan Renshu doesn't care about revenge, which doesn't make sense with his actions? He is effectively out of the war game between Sun and Cai as he was disowned by both and is now just used by Sun for favors between powerful cultivators. He seems to have an ax to grind in regards to us and is willing to mess with us in order to achieve his revenge.
To be fair, he sort of gave us a Causus Belli by siding with the rival faction and bullying a friend of ours. We started investigating him and Liling after that second thunderdome where he joined in.
The fact he instantly went "Oh, I should have fucking known it would be you" rather then "What the fuck are you doing?" Sort of suggested that he knew to expect some kind of reprisal from us in particular.
Regardless of whether he invited the attack by siding with Sun Liling or whether we started the attack by following the Grinning Moon quest, he is trying to get revenge against us for the theft we committed against him. To say "we should accept the punishments of those who catch us thieving" is to make the argument that we should not join Meizhen on this raid, and should do nothing to Yan Renshu because anything he does to us at the moment is in retribution for a theft we did.
I think I pretty much agree with you, Thor's Twin, that what we do is bad in a similar way to what he does. But I'll turn that around and ask you this: now that we're already perpetuating the abuse of other cultivators, and in fact are locked into taking more things from Yan Renshu for what really is not a great reason (whether it's Qi or Meizhen who does the deed)... how do we stop? How do we get things here to end?
That depends entirely on how people want to keep playing Ling Qi. The easiest way to avoid the abuse of other people is to become those hermit cultivators in caves. No interactions with people, no way to abuse them.
That, however, is not going to be a fun quest and is not the route that Ling Qi would want to go, as she doesn't want to feel lonely again. As such, if we want to participate in tournaments and take spoils from our defeated adversaries, I could see that as the next step above "cave cultivator" on the scale of least abusive. We are still taking from the hard work and successes of others, but they have an equal chance of taking from us and defending their hard work. And in a tournament, they knew what they were getting into when signing up.
If we want to keep being a thief, however, then we need to realize that this moral "dilemma" is not going away. We will always be taking advantage of the hard work of others, either by stealing their resources or stealing information so that we or someone else can blackmail them into doing what they want (which is much similar to what Yan Renshu did then simply stealing their resources).