I hear what you're saying, but I have to disagree on some points. Yes, a failed state is essentially a state of nature. You are free to do whatever you want so long as no one can stop you, and they are free to do anything they want to prevent you from doing it. In effect, everything is legal. Sure, not technically as there are still laws on books somewhere, but as you said, there is no authority to enforce said laws. To those residing in the failed state there is no practical difference. Everything is permitted. The ultimate freedom, and the ultimate vulnerability. So on this I agree with you. Of course, in such a situation, it's not that rape isn't effectively legal, it's just that rape and vigilantism are both effectively legal. Because everything is effectively legal. However, this is irrelevant as the town isn't a failed state. The country around it is, but not the town. The Institute has a monopoly on the legitimate use of force, and thus the town doesn't qualify as a failed state by your own definition. This is without question their town, and everyone lives here at their indulgence. If for example you steal from the casino, set fire to neighborhoods, or start shooting up the school they will come for you. They have laws for living in the town that are enforced. It's part of the reason Jaylee doesn't live in town. It's more of a city-state. They just don't enforce any law in regards to sexual assault or vigilante reprisals. They have effectively decided that both are legal, at least for the moment, because they ignore both. Part of the flaw in your thinking is that you believe that legality is an either-or (if rape is legal, stopping one from raping you is illegal). From trial by combat to violent land disputes and everything between, "sort it out yourselves" has plenty of historical precedence. It seems insane to us now, but again, that's our ivory tower existance that you mentioned. The Institute, regardless of what they have on paper, has effectively taken the stance that in the case of rape it is up to those involved to decide. Both rape and defense are permitted, because they have chosen not to intervene in either case. They have the power to do so, just not the interest to exert the effort or spend the resources. Hence, effectively legal for both. They have effectively approved the state of nature in this set of circumstances. Again, that doesn't mean it's actually legal, just that they have the means and choose not to do anything about it.
Now, don't get me wrong, I enjoy a good conversation, but can we take a minute to enjoy that this discussion has come from a porn game? Unexpected doesn't even begin to cover it.