The guy has cheated more than once, has been caught more than once, and has a more than decent dossier because of it. Once this is all forgotten, who's to say he won't try again? He is, after all, a repeat offender. And it's worked pretty well for him until now. All he's got to figure out now (and he's got the experience to do so) is how to do it without raising suspicions. And let's face it, that can't be too hard.
My concern is that this sets a precedent, that cheating will be lightly frowned upon and that's it. As this is a game that importantly rests on honour, that decision seems to me like it's in conflict with other values I thought dear to the community. And if I'm right that it's an important value to us, then I would make the case that the people who have the power to protect our site and values must act to defend it.
I have a hard time accepting that Diplomat33 will just lose a few WebDip points (which, to be frank, no good player here really cares that much about) for the way he's disrespected the community and its players. But if that's the decision the mods have come to, then I would make the following suggestion: let people vent off on the forums. I know this is not what you the mods like, I know it can cause problems, but I think that the community will feel the need to go through this on its own if the mods chose to act as I understand they have.
Don't get me wrong: I don't endorse public lynching and I don't believe I know better than you guys. All I'm saying is that your decision to keep the guy around will (justifiably) infuriate some people and that the best you can do to control the outrage is to give it a place to vent.
Also, given the public nature of the situation, it might be a good thing for the mods to come out and explain their rational in a thread: if you guys are right, then you shouldn't fear the debates. Trolls will be trolls, but reason will win over those who are worth it.
I hope you won't read this as mere criticism of the mods' actions. I may disagree with them on this particular issue, but I'm sure they too have their reasons and I certainly mean nothing personal by taking this position