Yes punish these kids when they screw up but don't cripple them.
Where would you have admin draw the line? They have a zero tolerance policy because they don't want to be sued by allowing some indiscretions to be okay while others got the full ramifications. If you are arrested you are off any and all extra curricular teams.
What if he was arrested for a violent act? Non violent? White collar crime? Cyber crime? Could the argument be made that more frequently females got away with these crimes and that males were unfairly persecuted? Could a case be made for gender bias, race bias, sexual orientation?.....how can the school draw a line other than at square one and say ZERO tolerance?
As for the cheating student...how can the school be certain he really attained his 4.0 on skill and not by cheating? It calls into question his entire academic career, and students talk....so and so got into Yale even though I know he cheated on every test and the school even caught him, meanwhile I got wait listed for my one B...I'm going to sue that school for being unfair!