My favourite filter fail occurred on the Legacy forums.
A user posted a rant liberally laced with f-bombs, so one of the Mods, edited their post, to which the OP responded by sending a DM to the Mod, also liberally laced with f-bombs, so the Mod reverted the post but then set vBulletin's filter to replace instanced of the f-bomb with the word "pancake". vBulletin, being somewhat stupid at times, instead of just replacing 'f***' with 'pancake, replaced every letter with the word 'pancake' so that all of a sudden 'pancakepancakepancakepancake' was appearing in people's posts. It was pancaking hilarious.
I found it to be so funny, that I have used 'pancake' in place of f-bombs out in the wild ever since.