One of the problems with letting people choose a size to use is the fact that everyone has different opinions on what is annoying and what isn't. The people that have big sigs don't find them annoying while others apparently do.
As for Tempest's sig, yes it was above the guidelines, but as I stated before, it only broke my page on the rare occassion. I understand that his sig identifies him, thats how I recognize his post usually, but he shouldn't get special treatment just because he is a mod. I'm not saying this so that he drops the sig, especially since the rule was abolished, but everyone here knows that the original rule, as it was posted, was broken by mods while the majority of everyone else changed theirs.
As for enforcing the rules, you are going about it the right way most of the time. People deserve a warning or two, but there have been repeat offenders who don't get stopped until they voluntarily leave. The problem with giving people too much freedom is that they don't know how to properly use their freedom and end up abusing it. (If that makes any sense.)
This whole situation is a perfect example of how politics seeps into everything. When a rule is made, it is followed unless it affects the "politicians" and then it becomes a guideline. The politicians are the first to recommend a budget cut from public programs, but when it comes to taking a cut to their salary or one of their own programs, its unheard of.