My first thought when I read the above "quoted" words were "There is no way that EagleSmack said that." When I read further and found the paraphrasing "defense" quite frankly it rather pissed me off.
There is a world of difference between "paraphrasing" and "quoting"; to paraphrase is indeed altering the words of another, usually to enhance clarification, quoting is verbatim. Mixing the two up is a really bad idea. Whether it is specifically mentioned in TOS or not, I have a feeling it would not go over too well. I know that FIFY is not regarded that highly, but at least in those situations the acronym is posted to indicate that the words in the quotation have indeed been changed. There was no such indication here.
Bottom line to me is that, on here, the only thing we have is our words. We cannot use any other methods to communicate with one another, body language, pitch in voice, nothing. Just our words. So the way I look at it, our words as written and posted by each of us, should be sacrosanct. It is extremely presumptuous, to my way of thinking, to alter those words regardless of the purpose for doing so.