What are the implications when an OFAC non-compliant transaction gets written into the chain?

Or vice-versa when an OFAC compliant one does?

There are no implications, since Ethereum is a public ledger where anyone can participate in validating transactions who have at least 32 ETH. For contrast, with bitcoin anyone can add a block who can produce a verifiable hash below the current difficulty target.

It gets muddy where with Ethereum where there are public companies like Coinbase who have to comply with certain laws as they are a financial entity running their own validators with coins from their depositors. Don't get me wrong there is an urgent need for regulatory clarity and not all regulations are bad.

So then is increased length of validation for non-compliant transactions the only tangible drawback?

Which, to be clear, means everyone processing ETH transactions is complicit in circumventing OFAC and should face the legal remedies available.

Lol. You should take this up with the US banks processing millions of dollars of illegal transactions daily and get a light slap on the wrist each and every time they accidentally get caught.

I think the difference is that the US banks didn't go out and deliberately declare "Here's how we're going to empower fascists to circumvent the rules of democratic nations". I'm not making excuses, there's lots of examples of Deutche etc. that are breaking rules, and they should be punished for that. But at the end of the day, they atleast accept the legitimacy of the rules.

I'm not sure I agree with that rhetoric. There are many countries around the world who see the US as a fascist entity who has bombed the shit out of them imposed economic sanctions and destroyed their way of life. As an American I see economic freedom as intrinsically good and what the founders would have always wanted. I do not see our particular set of OFAC rules as democratic neither our economic hegemony as something we need to accept as morally right.

I am not against that set of rules, especially for the legacy system, but it's not on blockchain devs to comply.

We will have to let our legislators decide. Starting to see a good amount of bipartisan support for reasonable regulations (in the eyes someone who is pro crypto). And whatever they decide it will prove the true strength of a blockchain if it can resist censorship. For example, if they choose to make Coinbase comply with OFAC on an attestation level the system should be able to deal with that through social slashing etc.

Sure, absolutely, there are people out there who watch women in Iran get murdered for not wearing a Hijab, or watch the people of North Korea starve to death under a totalitarian dictator, and say "Yeah but the US isn't good either" and they're wrong. There is a bright clear line here, the US is a democracy with real institutions for holding the government to account, and the entities on the OFAC list aren't. If you want to support the totalitarian regimes of North Korea and Iran against the interests of the US fine. But let's call it what it is, you're providing aid to the enemies of freedom and democracy.

The obvious difference is that banks make at least the bare minimum effort to prevent being complicit (KYC). Ethereum validators do not, but there is the argument that there are not tools to effectively do that yet.