The best to way to mute someone in SL is to set a message that is automatically sent to anyone that sends you an IM if they are on your mute list. For example, something like this:
This is an automatic response! You've been muted.
That way you don't have to send them a message that says muted and then add them to your mute list. You just insult them and then quickly mute. When they reply to your insult, they get your automatic response so that you always get the last word in.
You find the automatic response settings for muted people in advanced chat settings on Singularity.