That seems pretty unlikely to have happened here; I don't know the Russian word in question, but the Chinese "hui" rhymes with English "clay". (It also rhymes with the more sensibly spelled Chinese "wei"; the 'e' is only omitted when the syllable begins with a consonant. Compare "feng shui".) I'd be surprised if that were a possible reading of any Russian that might be transliterated "hui".
As to why the filter was applied to Latin characters - I'm not sure, but I'm assuming that's to prevent people from using translit to sneak in profanities. Of course, this ends up being a pointless game of whack-a-mole - there's so many possible ways to spell something like that with Unicode...
Looks like Russians and Americans can find common ground on thinking Chinese last names look like "penis", even if we're making fun of Wang and they're making fun of Hui.
This still shows up in some contexts - e.g. Й, like Ё, isn't used in bullet lists; try it in Word - it'll go from И straight to К.