This seems like a fair synopsis of the debate, well done for taking the time. You summarized my position accurately enough.
To be clear, I was making a very narrow point which should not really be controversial. Punishment, when understood as retribution, is an affront to human dignity and also just ineffective. It irritates me that so many people (the vast majority of us, let's be honest) seem stuck in this medieval mindset of "let's hurt the perpetrator".
But punishment does have other more positive aims, such as restoration (making amends to victims) or rehabilitation (of the perpetrator). Well: the evidence is pretty clear. Places with liberal (progressive) criminal-justice systems, countries like Norway with its ultra-light-touch sentencing and "holiday camp prisons", these places have far less crime than places like the USA where most people are still stuck in their conviction that things must be made miserable for the perpetrator. Ultimately, we have to decide what we want: do we want to feel good about ourselves for having got revenge on someone who did harm, or do we actually want a fairer society with less crime, including financial crime? If it's the latter, retribution is a dead end.
Back in the land of hard choices, of course wage thieves and tax evaders need to pay some kind of price for their misdeeds. Not least for the symbolic value, and for the shame (rather than suffering) that it inflicts on them. This is roughly what happened in Iceland after the financial crisis, BTW. A bunch of bankers did actually go to prison there. But the sentences were short and, IIRC, it was basically some form of house arrest. That seems to me like a decent solution.
Text communication is always going to be a challenge for human beings. We are just not evolved for conversation where you can't see a face or at least hear a voice. It's a constant minefield, the potential for misunderstanding is almost insurmountable. To pull off a fruitful discussion by text, especially with multiple participants and group dynamics in play, and have people learn things and feel that they've had a decent hearing - that really counts as a triumph, in my view. It is absolutely the exception, not the rule.
The best way to do it? In my view: to take an almost autistic approach. Stick as rigidly as possible to facts and to the topic. Assume good faith, even when it's hard. Steer clear of humor and second degree. Perhaps it's not a coincidence that the most civil, productive virtual communities (Hacker News, for example) are filled with IT types for whom these qualities come a bit more naturally.
Another rule I have: no swearing. At best it looks infantile, at worst it it just raises the temperature pointlessly. (Personally I often stop reading a comment when I see the word "fucking" - this is not a serious contribution that I need bother with.)
And I've also learned to try to avoid the word "you". This BTW is a standard trick used to encourage civil in-person debate, for example in parliaments where people will address each other using the third person or via the speaker. It's also why so many languages have formal words for "you", intended to increase distance. It turns out the word "you" functions as a sort of low-level trigger for humans, a bit like eye contact for so many other animals. Best avoided.
As I was saying: text communication is just hard. I think we all need to make more allowances for this fact.