On your first para I'm not remotely sympathetic. They are using a complex, sophisticated tool without understanding it. They got what they deserved. Particularly telling is this ridiculous quote "I'm a little disappointed that SQL Server treats our silly little web app like it's a banking application". Edit: so, they wanted even more lax integrity constraints by default? FFS
And, BTW, deadlocks can most definitely happen using the default Read Committed isolation level.
Per your 2nd para, I simply don't understand, can you clarify?