If there's something in the terms and conditions that says they reserve the right to change the configuration on your system because their explicitly identified policies for dealing with high CPU usage aren't working, I might back off from the "borderline criminal" descriptor -- but I'd still say that's a great way to make customers feel violated and run like the wind to other service providers. As many others have pointed out, a much less invasive approach would have been to simply pause the server and get in touch with the client -- especially after the service provider asked for permission to get root access, and was turned down.

yep, I'd agree entirely with that :)

In this case their posted terms and conditions aren't very clear on the extent that they can muck around with a customer's VM. It's quite clear that they can suspend or kill it, but it's unclear how far they can go to "restrict" the customer's VM.