Thanks for the compliment.
We used to do the same thing where we would remove the user's avatar, and would ban the user if he did it again. There are a few boards out there, some of which are allies and others are in competition with us. A banned user usually tends to start bad mouthing us which ends up costing us users.
We found this to be the best way to handle this. In fact more than half the avatar offenders have switched to non offensive avatars on their own.