Honestly, I don't consider number 7 to be wrong.
The first warning will let people know they have their computers infected with something and are a problem for the rest of the society. If they choose to ignore the warning and not fix the computer or take it to the shop, they are unplugged from the internet.
Maybe so, but what they are doing is targeting the victim not the perpetrator. Also, notoriously, a warning will most likely be by a means where reception wasn't guaranteed, (eg. normal mail or email) - both can go missing. I know, I've had it happen and it's normally always for something important.
There are situations where computers are on 24/7 and the owners are not contactable, (eg. they're on holiday) - should they be disconnected because a warning went unanswered, thereby taking down a possibly income producing machine?
How will the ISP distinguish between a bot and a machine doing valid "bot like" things?
Who gets to pay the, (current for Telstra), minimum $90 reconnection fee?
The theory is good but the application is wrong - it would be better if they spent the money on educating people so it didn't happen in the first place.
But this is all academic, as soon as the $43b RuddNet is installed to every house and the mandatory ISP based filtering is installed for everyone.....virii, bots, porn, dissent, etc will be a thing of the past and we will indeed live in the "Lucky Country".
Something similar happens with cars (in portugal): if your car doesn't pass on the inspection, you must fix it. If you're caught driving it without the inspection in order, the car is apprehended.
Your analogy would be more correct if your car failed to pass the inspection due to malicious intent by another person - leaving you with the expense of fixing or reclaiming your car while leaving the original perpetrator free to do it again.