They weren't holding the domains hostage, though, right? You can find any other registrar willing to have you and transfer your domain from Namecheap to them (and I think Namecheap would get in trouble with ICANN if this weren't the case). So customers are mostly just inconvenienced a little.

So long as you provide ample time to transition and sound reasoning, firing customers you can't effectively service is the best thing to do.