It's because of the way LotC's moderation is structured. GMs are the ultimate authority, not the server rules. You're not enforcers of the rules, you're in a sense vigilantes: you enforce what you think is right rather than what is written, and some of the rules are intentionally vague to assist this. And because there are so many of you, this results in inconsistent, opaque and terrifyingly personalised moderation and enforcement. Most of the GM enforcement rules are hidden from the players. As a result, the players as a whole don't trust you. These calls of bias and "pocket GM" are not unfounded: even if that's not the case it's how it appears.
This is easily fixed by changing the rules in a manner I've been suggesting for years, starting with axing the rule the that a player must immediately obey any GM command (whether it's breaking the rules or not) or face banning. End the "unwritten rule" nonsense and require any ban for a rule not on the server rules to be added to the server rules within 48 hours or to be overturned. Cap on the spot bans where the rest of the GM team has not been consulted at 1 hour. Create a second, public GM ban report forum where copies of every ban along with their reasons must be posted (I understand the need for the second one due to particularly graphic chatlog evidence not being suitable for public display). Drop this "cannot appeal for X hours" silliness: the whole point of a ban appeal is to protest the ban as wrong: all that serves is to claim infallibility and give you the power to ban freely without consquence.
Operate transparently and make the rules thread the ultimate authority rather than yourselves, and players will be angry at you far less.
And give the halflings their plot back. Seriously, this is just GM Team saving face and being angry at the loudmouth halfling leaders. You're talking about the right answer, and I can hardly see how obliterating the halfling's plot serves any right whatsoever.