First off, +Nyx and +Veritas - it has been building up for a while and now needs to be said - I'm seriously impressed with your cool and logical posts! Makes for great reading. +V, thanks so much for the slick Avengers reference - biggest LOL of the day.

Second, some of what you've said, +Nyx, rings so true.... I've never been a UO server GM or admin but I know people and I sympathize.
"We'd love it if everyone behaved like adults and followed the rules, but that just isn't human nature, and that's even more true on a video game." -- I say all the time, you can take the people out of Felucca but you can't take the Fel out of some people.
"Not that you'll hear it from a buddy who got jailed, no, you'll only hear how they shouldn't have been jailed in the first place and we were so mean." -- several friends of mine who are Corrections Officers say all the time, everyone in jail is innocent - just ask them.
"Nearly every single time I have been very kind and given someone a break on their tasks, they spit it back in my face later with entitlement and drama when they violate the rules again..." -- first job I ever had, I learned the same thing in my first week. I was a new cashier, didn't know what I was doing, cut a customer a break on cookies to avoid making them wait forever. Shocked the hell out of me when they came back a few days later and wanted the same deal again. Taught me everything I needed to know when I said 'I can't do that again but I DO know how to do it right now' and she went straight to a manager to complain about me and dime me out about the previous favor.
Third, I think the AFK system is more than fair - I've been hit with the captcha and GM questions and had no problems with either. It's totally necessary that there be a system in place and this one works. What's more, the punishment makes good sense. Players can deal with it in their own way and in their own time and it drives the point home well. If anything is not fair, it's not caring about losing a weapon and the ability to play on Excelsior until you've already gambled them away.
Fourth and last, I've read through old punishment rage threads (Favorite title: "There will be repercussions") and they always end the same way: with staff clubbing the offender into submission with the Cudgel of Logic and Evidence. For Pete's sake, learn that taking a bad case to the forums is NOT going to make it any better.