Anyone saying that it was a bad idea to ban the entire University isn't looking at the big picture. I look at it from a very philosophical standpoint:

The entire idea of an academic (research) institution can be summarized as "an entity representing a group of trusted people who act in good faith of that institution". The moment one of your researchers acts in bad faith, or shows that they cannot be trusted, it's clear that the institute cannot be trusted until the institute takes decisive restorative action. By banning the University, you are saying "we no longer trust you in your authority as an institution until it can be made clear that this isn't a systemic problem."... you are not saying "every single person at the University is terrible" as it was framed by some commenters in the other thread.

This is why, in any broad case, it's so upsetting when an institution of any variety doesn't take clear responsibility for the behavior and actions of its members or representatives (take for example the police, or the federal government). When that is true, the behavior of any member of that institution should be subject to scrutiny and distrust. It's not a complicated social phenomena.