Don Talbot rocked up at an Australian swimming squad gathering a year or two out from the Olympics a few years ago and said words to the effect:
To get where you want to get to, you can't be normal. To be an elite swimmer, you can't do the things your friends do. To make the Olympic team, let alone win a medal, you need to exercise levels of discipline you're only dreaming about. If you don't think you can do that, if you don't want to do that or if you're not prepared to do that, leave now; you won't make it and I don't want you distracting the immensely disciplined athletes around you who know what commitment is and know what it takes to get to the top.
That is why O'Connor should be punished. He might be a good player, far better than his immediate replacement even, but, without the right attitude, the right level of commitment and sacrifice, he will detract from the team over the long run. He'll also let himself down, but that's another story.
To go back to theories of punishment, he should also be punished to demonstrate to everyone what acceptable levels of behaviour are. I said above that he should be left out of the RWC squad and that is undoubtedly an extreme position. However, a one match suspension and suspended fine aren't substantial enough in my view.
As far as the fisticuffs go, I'm less fussed. What I don't want to see is the Wallabies brand (they do have one as opposed to JOC (James O'Connor)'s pretensions to have one) devalued. If they really want to go for it, put them in a ring in the gym and let them go for it until the blood flows in rivers for all I care. They shouldn't do it in public though.