Either way, I do get the feeling I'll eventually end up on your side.
You will. :P
In all seriousness, sometimes, putting a little fear out there is healthy (keeps some things in check). However, if it becomes a thing of abuse, then yeah, we have to nip that. We have some missteps there, but the fix to things isn't always easy. Just like having toxic users banned. Sure, that's the easiest way to remove a problem in the moment, but think of a colony of roaches. Stomping one here and there is futile if your house is infested. Strategy is what will need to be applied.
Crazy as it sounds, sometimes, it is more strategic to let a toxic user remain, as they can bring in site traffic. I'm not saying let it be a free-for-all, but controversy can be healthy. I particularly feel you in one area - mods shouldn't always be arresting officers. Sometimes, a simple intervention is enough. Loud and clear, I hear that!