I'd love to respond to all of you in full, but it would take too long. Instead, I'll respond to the general ideas.
1) There are other ways to show that it isn't tolerable. For example, shutting down the chapter. Punishing each individual that was in the chapter or only those caught on camera is going too far. Now it's unnecessary retribution given to those who got caught up in mob mentality... in a setting that pretty much encourages that mentality.
Shutting down the chapter sends a message and makes it difficult for the negative aspects of that mentality to continue within that setting. This is appropriate punishment. It takes care of everything that is necessary without going over.
2) None of the excess solutions actually attack the core of racism in any respect. Rather, it only encourages people to hide their racism, and only express it in, say, voting, or hiring, or redistricting. All incredibly important parts of institutionalized racism.