Okay, I've caught up all of this now that I'm home from work. Quite a lively discussion.
If I can be so bold as to boil down what I'm reading, the chief complaint is something on the lines of: we haven't adequately set up and stated how we will observe or track troublesome players, in a way that lets us deal with them effectively, while also respecting the privacy of our non-troublesome players. (If I've somehow missed another major point, let me know.)
I hear and get the concerns. @Auspice - I agree with you that there needs to be a reasonable expectation of privacy, and we do want that to be established as part of our setup for also dealing with the troublesome sorts that we know will eventually rear their heads at us. Thank you (and @sunny too) for bringing this up, and advocating for it, it's the type of constructive feedback I was hoping to hear.
There have been good suggestions put forward (things like Suspect and Rhost, as well as having a clear setup for tracking/logging complaints). I'll admit to being a bit rusty on my PennMush, so I'll need to do the legwork on all of that. I will. I don't want to guess at the final solution right now, but know that I'm working on it and will report back.