I'd like to suggest that when you place someone on ignore it also make them invisible to you. The reason I suggest this is due to kids abusing the "giant' sized mounts by parking on top of others during fights (making it hard to see how many pips you have, health, etc. plus its just rude and distracting) or parking on top of vendors or quest givers in an attempt to "hide" them so other players can't find them. While it doesn't prevent someone using the vendor if they know where it is, if someone doesn't know about the vendor or quest giver they may miss it because of this. If they were made invisible to you by ignoring them, this would at least partly solve the problem.
Have you tried switching realms? Hit escape key, the click the second to last button. (between the lock and the star) The default sort is busiest at top. But you can't switch realms 1. Within one minute of switching realms. 2. During battle. 3. In a dungeon or bossroom 4. While at somebody's house or dorm (including your own)
I wonder if you are thinking about the Kraken boss! I haven't seen this happen outside of Wizard City. Most crumby behaviour disappears as you advance in worlds. This isn't an excuse, just an observation. I think its people somewhat new to the game trying to show off. A level 15 wizard in Wizard city with some awsome mount seems so incredible... until you have played the game some more...
Graham: I generally play on the less populated servers and you can't exactly switch realms in the middle of a fight or when you are part of a group. Once you get in an instance its not an issue since only those joining the instance are there (generally, your group or just you solo).
Rotten: Actually, lately its been an issue on Avalon. Last time it happened I was helping a friend (who was on a more populated server) and had three such "situations" withing 30 min. It involved two other kids, one parking a hydra mount on top of a vendor, the second was another kid (different character and presumably different player) also on a hydra mount following and parking on top of me during fights (no idea why they singled me out other than I was the highest level character in the group). Its worth mentioning the second kid was a level 30ish running around on high road with another level 30ish and 40ish player who had somehow gotten there. The second encounter ended with the pest getting drawn into a fight, and then the other two getting mad when I an my friend wouldn't "help" the 30ish pest.
Ignore shut them up but didn't prevent them following us, at which point I did indeed go to another Realm. If ignore also had made them invisible (both ways, I can't see them, they can't see me), the issue could have been resolved during the first fight.