This is the kind of thing where a customer who gets their information stolen while Rackspace is waiting for the grace period to expire might have a legal cause of action against Rackspace.
Ultimately, I think Rackspace did exactly the right thing here. If you are operating a service that would potentially allow fishing, then you are bearing the risk of policing your users. Asking Rackspace and affected users to give you a grace period is asking them to bear the risk instead. I 100% agree with the decision to immediately shut the site down.