I think you only went to the trouble of writing a "webserver" so you could put "This website is hosted on a webserver I made myself in c++." at the top.
Or perhaps he just wanted to do it for the fun of it?
It wouldn't be the first time someone has made something 'for the hell of it'.
Idiotic? The CSS code can only decide how a page looks, not how it works. Allowing this form of customization would be an easy way to give people the ability to give their profile a personal touch without any real security issues. And for the image, so what? But if you really want strict moderation you two could come up with some moderation system. Or an option to disable other people's page's custom themes (completely or just that person).
Or eliminate the problem all together and offer certain pre-made themes/color schemes for profiles.
I suppose once again it's a matter of judgment. Is it worth sacrificing some freedom to gain some safety, content-wise? I don't want to see gay research when I click on some dude's profile, but I also don't want to be completely unable to customize my own.
Ah well. I guess I dunno where I stand on this.
Also, it's worth noting that CSS can really forget with sites - for example, you can edit height and width attributes on images for example which would rape the layout.
EDIT: Another thing. Chat should go from oldest to newest. That's just customary. If you want, create an anchor at the bottom and link the user there when he opens the comments section, but don't have it go in reverse chronological order, that's insane.