Is there ever a time when you should be more direct and react?
Only when you cannot ignore them. If they get physically threatening, for example. Or if it's your job to manage them.
Generally speaking, a person who goes around making insults is a loser in everyone's eyes. The whole point of not reacting is so you don't get down to that level. Reacting is a way of qualifying something that someone has done, even if you oppose it.
My personal guidelines for dealing with this sort of thing is:
1. Tooling - who cares? Just ignore temporarily or play along if you feel like it.
2. Persistent tooling - this person doesn't get the message. Ignore permanently, interact with them with only very basic politeness, give nothing else.
3. Insulting - confront them and ask them what's going on. If they play passive aggressive games, force your frame onto the situation, let them know you consider them irrelevant, tryhard, socially uncalibrated, a loser. At this point, if someone won't dialogue with me, I consider them nothing more than an opponent and fair game. I will enjoy grinding them down and squeezing them out.
4. Physically threatening - basically go through each of the above steps quickly. If they are bent on fighting, decide if I just want to leave or not. If they are part of a group, and no one has come to my aid (especially the leader) I will never interact with the group again, regardless of what happens next. They don't have my back or any loyalty to me.
The basic idea is that when you react, or get into a battle or fight, you poison the setting that you are in - your relationships with owners/staff, the people/group you're with, the people you might regularly run into there. They will likely never be quite comfortable with you again. If you decide to give in to your aggression, expect a lot of collateral damage that you might not be able to repair.
This is one of the problems with aggression, it's why it's so necessary to learn to play the long game, to maneuver carefully with dangerous people. You will always lose something, whether it's the trust you've cultivated with people, your knuckles, or worse.
Part of this is that people are afraid of aggressive people, especially when they know they aren't capable of it themselves. Another part is that when things go south, regardless of the circumstances or situation, the simple truth is that you failed to deal with it gracefully. Men are leaders, and a leader is not judged on excuses, no matter how legitimate, but only on results.
Btw,
this Charisma On Command video is a great video for understanding the subtleties of confrontation <embedding not working>
