What makes 'St-n-c-tt-r' a 'smirking pun'?

The pun appears to reside in the fact that stone is a colloquial/slang term for 'testicle'.

The essential meaning of the passage

Some people admire that when the person offended had so fair and suitable opportunity, it did not enter his head to turn St-n-c-tt-r himself

could therefore be rendered as

Some people applaud him for not deciding to cut off the testicles of the interloper when he had the chance

To spell it out, 'stonecutter' would mean 'cutter of testicles' in this context.

I assume the bowdlerizing blanks are being employed to obfuscate the vulgarity of the pun.