Everyone should note that they called law enforcement and law enforcement used physical force on the passenger.

Should the airlines be prevented from ever contacting law enforcement? Is law enforcement not responsible for their own actions after the airline asks them to do something?

The should not contact law enforcement when someone refuses to leave the plane because it's overbooked.

If someone is actually causing a problem or is somehow dangerous, then yes, by all means, call the police.

An honest way to overbook would be to sell seats beyond capacity as standby.

Selling "over-capacity" as stand-by is potentially problematic, as it's not at all clear when you're overcapacity. It's always a probability game. Classifying tickets as "stand-by" as soon as probability > 0 would likely reduce their desirability, resulting in less full planes and higher overall prices.

The opposite setup would not, though. i.e., like refundable tickets, offer non-refundable guaranteed tickets that are locked out of the ticket system. This maintains the current pricing characteristics while offering travellers the option of paying more when it matters to them.

Or a sliding scale of probability of being seated. If your typical ticket has a 99% chance of being seated, most people won't care to pay extra but they know they have the possibility of being booted and cannot possibly complain.

The problem with all of these approaches is they add to the complexity of purchasing a ticket, which consumers generally don't like.

They are just selling all/most seats as standby.