It is justified what you did was illegal and not cool but they had the chance to turn it into something positive.
Plus, there was no way Gabe could have known that Axel was 1) truly apologetic or 2) wasn't the one who also published the code publicly. And even if it was known, the fact that he shared it with friends showed that he didn't seem to care that much about protecting it.
That being said, I do work in the security industry and understand that Axel's motivations weren't evil or anything. Gabe still did what he should have done.
Then again I'm sure he was really pissed so I can't blame him for doing what he did.
Maybe the kid who did it wasn't actually sorry; maybe he was hoping to get more access so he could steal more stuff. That's a way it could hurt.
Maybe bringing the kid who stole your team's work and demoralized everybody isn't going to do great things for the company morale; that's another way it could hurt.
Giving people second chances is great and all, but it seems silly to say "[it] wouldn't have hurt"; it could have very easily gone wrong.
That presumes you are 100% confident that the guy is completely remorseful and will no longer do anything wrong. Given past behavior, why should Valve have had that confidence?
'prison' and 'punishment' aren't synonyms. Make someone work their ass off to repay a crime IS punishment. As is locking them up, but by doing that, you severely decrease the chances of that person ever being a productive member of the society again.
Of course, should that person break the terms agreed upon, then I guess prison time is warranted as an additional punishment. And even in this case, with non violent criminals, in a setting where they can still work.
Prison is fantastically expensive, not particularly effective, and severely degrades the offender's life.
Restorative justice is much cheaper and more effective at fixing the offending behaviour, and the results of that behaviour.
Prison should be left for violent or unrepentant recidivists.
Nobody knew everything would turn out OK back before HL2 was released.