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Bubble Buddy proving he was sentient later in the episode means that SpongeBob thought he would actually get him out, and Bubble Buddy chose to watch him drown. Bubble Buddy gets away with murder.
So were the townspeople right to run him out of town? He may not have poisoned their water supply, burned their crops, or delivered a plague unto their houses, but he did make that guy experience high tide, so maybe he would have done all those things too.
Dude was chill as fuck a s a ghost so I guess it was actually assisted suicide
What elevates this joke from dark to clever to outstanding is that a fish is drowning, in water, under water