Wouldn't it have just made more sense to just further limit his CPU share? Even if he was abusing the service, I don't feel their actions were justified. Especially since they state in their email to him that if they cap the CPU then they don't care how much of his CPU share that he uses.
I think rimu was right to limit his CPU share. It was unprofessional of them to root his box and shutdown apache, but it seems he was a user with an history of high CPU utilization.