That being said, the onus is on the student to make sure they aren't submitting someone's work as their own. I'm not really sure if they understood what they were doing was serious (as in if Coursera was just a bunch of robot drones and they didn't give it much credibility). I know this incident legitimizes Coursera (and it's certificates of completion) in my eyes.
Really I believe all they need to say is, "Look, we really put a lot of work into this to make a good experience for people. We'd appreciate it if you took your answers offline and help make Coursera a respectable name in learning by submitting original work". The whole "We'll start expelling!" doesn't really strike a chord with me. I've been expelled before [not from coursera] for really dumb reasons.
# ALSO, they should take their Honor code out of the ToS. Put it somewhere that people READ!
I think the expelling is totally fine. Martin and his team put a lot of time into this, developing the course and the tools to automate grading and if someone is going to put this up publicly and not take it down they should just boot them from the course.
I don't understand why anyone would actually turn in the same work, though. It's not like a completion certificate from this class will get you closer to a degree or anything. I'm sure there must be some reason and I hope it's more than just "I wanted a 10/10 for me to see!". I suppose that an employer might tell someone "learn Scala and get that certificate and get a 10/10 on every assignment" but I somehow doubt it.
There it is, really obvious too.