It looks to me, Reddit simply doesn't want to get involved in a land war in Asia. Trying to tinker with the rewards systems means investing a greater and greater fraction of their resources to fighting opponents who are better-funded and adaptable, in an asymmetric fight that favors the attacker. Even if they could succeed, that comes at an opportunity cost of what they could have done to improve Reddit in ways that actually have an impact, instead of just treading water.
Perma-banning these domains could be the full strategy. The long-term strategy could also just be to negotiate with these domains, with these initial bans acting as the "No really, I'm fucking serious" threat that gives themj real leverage. I would prefer their strategy is the latter, but I wouldn't really blame them for picking the former either.