I don't think anyone is saying a person should not be punished for breaking the ToS. The issue is the ToS is so overtly heavy handed, that it actively discourages people from socializing in an organic matter.
Was in Malikah's Well, and the tank had level 70 gear equipped. I Imagine they had been leveling in Bozja and forgot that their gear was outdated. I've honestly done it too. It's no big deal. Yet when pointing it out, they lash out, cry "elitist" and threaten to report.
I doubt they even did, but the fact that it's feasible to do so and something coming of it, is kind of silly.