I wasn't around when General was, but, in all honesty I don't see what could be or was so terrible about it. It could be abused, i.e someone spams or says some vulgar stuff but that happens in any and all chats regardless. The only issue is that it reaches such a large audience (i.e everyone in the whole map). But it wouldn't make all that much of a difference in the landscape Feral Heart is now.
Everyone mostly chills in the entrance of The Grounds and that's where the bulk of discussion is these days and if people just didn't like how chaotic it could be, they can tune it off.
As far as I know it was very hotly contested whether or not it should've stayed. I don't know the reasons in full, but most online games have this function. Chats will be abused no matter what, local or not, it's however up to the individual to be accountable for their behavior and for things to be moderated.
I haven't been around that early, so I perhaps don't have much of a dog in this fight, but these are my thoughts.