If he's fine with it then generally it's fine. If someone else finds it insulting and tells the person who says it they find it distressing and the offender doesn't stop then you can comment on the ban report with a complaint. But most of the time people are ok with being called stuff.
User: "HII KIJANUB!!"
I don't take offence from it so I don't mind them calling me that.
(Plus most people don't consider Boobcakes to be insulting, however Asshead would be insulting)