IIRC they didn't ban him - rather, they told him that if he kept competing they'd just cancel the competition. This was not out of spite, but because he was so dominant that it was discouraging the other players from even trying.
Probably, yes. Somewhat closed gaming groups can have fun with an imperfect game if everyone agrees not to abuse the holes in the rules. (After all, rules abuse does not necessarily lead to a more fun game.)
