Highly debatable. It's by no means clear the rules should have been applied to this case; they were very vague "we can ban anyone for anything that makes us look bad", but what has made Blizzard look bad here has primarily been the enforcement of the rules.

If they had just played it off as the players speech, and nothing to do with them at all, it is by no means clear any significant blowback would have stuck to Blizzard.

The NBA issue is very different because the original tweet was from the general manager of a team with close Chinese ties. It's like if a Blizzard exec had expressed pro-human rights sentiments in an interview.

Obviously we'll never know now, but Blizzard did so much to increase the perceived importance of the event beyond where it would naturally have been (eg, their statement on an official account saying they would always "resolutely safeguard [China's] national dignity"). Once you've framed it in those terns, it's hard to back down. Were there really no alternatives though?

Only if China decided to do so. They can pick a fight about anything they want to, so there is really no avoiding that.

For further evidence of that, look at what happened to Lotte, a Korean conglomerate that was essentially banned from China for the crime of having previously owned land that the Korean government used for a military purpose that China did not like.