You see the problem I have with that argument is that in the online world of steam, one can simply just get a new account.Adding this server option is a drastic measurement comparable to calling out a state of emergency.
It is a rude but effective means in order to fight the serious threat that this weird hacking community posed towards ROHOS/RS online gaming.
Now this server options have to become more differenciated. Selfrightiousness [?] and unforgiving phony moral superiority may suite a police state or some fanatics, but not a gaming community in the modern world. Nobody and nothing is perfect.
VAC bans exist for a reason, they aren't supposed to be slaps on the wrist. The whole point they exist is to deter future and past cheaters from ruining games. Sometimes a account gets hacked and they get unfairly VAC banned, but its a risk we accept.
Also, there are people who get VAC banned and never want to hack again. I understand that. The easy way to get passed that dumb mistake is to buy the game again. Its not like your are executed on the spot. Your simply just barred from playing games on servers with server owners that don't want you.
They do have a reason to not want someone who was VAC banned, hackers tend to ruin the enjoyment for many others when they are hacking.
TLDR: I dont think its drastic at all.