It happened to me, about 15 years ago. (The "option of contacting the plate owner to try and defend their decision" is a new wrinkle)
My to-be-censored plate read "RU ASI9". Got a letter from the SoS stating my plate had been "disallowed", and I could get another plate, free of charge - So I went with "CNSRED".
I tried to appeal - The SoS flunky told me that I would never be allowed to know the identity of my accuser, that there would never be any assemblage of my peers to hear my side of the story, when I pointed out that the word "asinine" is neither vulgar nor obscene I was told that that wasn't what mattered - All that mattered was that some faceless nobody had bitched about my plate, and that was all the SoS required.
I asked the flunky, "Are you telling me that I can anonymously phone in a complaint that somebodys' plate said, oh, say..."I PRAY D U" - And the Illinois Secretary of State's Office will yank that plate, and there's not a damn thing the driver can do about it ?"
"Yes, sir - That is correct."
I said, "Do not tempt me, lady." She said, "I wouldn't dream of it, sir", with a half-smile I still sometimes wonder about.
I've never been petty or mean enough to follow through on it, though, although I have been tempted - But then, I just remind myself of how shitty you have to be, to get your judgmental thrill by squealing on a random driver whom you'll never meet.