Which we already do. So I'm not seeing what we could have done differently in this case.
Just because we couldn't have done anything differently doesn't mean he has no right to be upset about it. If anything, incidents like this prove that we really need flagged revisions on the English Wikipedia--libel can actually hurt real people's reputation and feelings, and we need a way to stop it from appearing publicly.
On that note, I'll invite anybody who's interested to join the discussion about implementing a trial of flagged revisions on enwp's featured articles--check out http://en.wikipedia.org/wiki/Wikipedia_talk:Flagged_revisions/Trial.
Best regards,
--Thomas