The word was humorous to me at one point as well.
However, it was being applied in general to homeless people.
Portland, like many cities, has a serious and growing problem with homelessness.
The word was being used to demonize and unfairly group drug addicted folks, people with mental health issues and those who are not those things but still homeless.
I do not know if there was a need to ban it outright, however I think there were reasons to want to.
To some extent, sub-wide decisions like this are taste-profile questions and with taste you will not get agreement.
For example, Craig Newmark had to walk a fine line with adult services on Craigslist. Many craigslist users wanted those forums. Many did not. Ultimately, I think decisions like this give character to the community.
So with /r/portland, banning 'criddler' wasn't just about banning a word, presenting a posture of the sub toward homeless people in general.
 One way to solve this is to allow the sub to elect moderators, which is what /r/portland did. In this case, I did say that I was for the ban on the word and was still elected by the community that was angered by the ban.
In my area, people complain that there are homeless people 'now', when I was a kid, fishermem would come home from Alaska with thousands of dollars of cash in their pockets, buy a tent and a sleeping bag and just camp right next to the bar. Lots of couch surfing. People had bars on their windows.
These PNW cities have always had a lot of drugs and poverty and depression. Cities built on logging, fishing, lumber mills, paper plants, shipping ports and airplane factory work.
The tech hub vibe and the people who moved to here from the suburbs see this as new. And in a way, it's been exacerbated by skyrocketing rent, but part of what we're seeing is a lack of places where these people could hide in plane sight.
They've always been here. This is a subculture that has always existed.
I'm 4th generation Southern Oregon and when I was a kid (20 years ago) I rarely saw homeless people in Medford, they either were much more reclusive or didn't exist. Ashland is it's own case however and we would play the game "Hiker or Homeless."
There's a bike path that runs from Ashland all the way to... Well, at least Central point, or maybe Gold Hill? It's about 25 miles. The Medford sections are now overflowing with tents and homeless camps, enough to make it dangerous for families and children. This was unthinkable twenty years ago.
That's what I'm getting at, I should probably do research on my own time. Thanks for doing the good & dirty work of moderating a subreddit.
Don't drag the debate in here!
You might as well wave a red flag in front of a bull! Or pour gasoline on a tire fire!
(Meant humorously with no disrespect.)