It absolutely is. If I were running an event like PAX, I wouldn't want someone like that ruining the perception of the quality of my event. Event organizers are on the hook to curate the quality of their associated partners.
Those customers not only buy branded merchandise, but are also the reason that PAX is profitable, because those gamers buy tickets to PAX, and then go to the convention and buy gaming-related goods.
The vendors are not the customer. They're important, but secondary to the gamers by a wide margin.
What Mike has done is to show, in a very concrete way, that he will stand up for his customers, and in any business, that's a solid move.
Actually no, unless PAX has a very unusual business model (which I've seen attempted by one event organiser once, and it didn't go well) the vendors are more important than customers.
Obviously, both are technically customers, as both pay money and if you lose 100% of either group your event is dead. But generally speaking vendors are considered more valuable - largely because each single vendor is worth X visitors in revenue (where X > 1).
This is still a good move by PAX though, because a.) PR, they got to be part of this story, b.) The exhibitor they banned (for all we know they weren't even going to have a booth - PAX might have just banned someone who wouldn't have been giving them any money anyway) was small enough that the lost revenue was small, and I imagine very replaceable with another exhibitor; meanwhile the upside in PR and what consumers think of them is greater, as a small move shows people that they can trust PAX events to only host "good" companies.