Unban. To me, the point of a permanent ban isn't a punishment, it's a service to the other members by removing someone from the community that can cause harm to them in the future. Thus scammers, hackers, cheaters and serial flamers are usually the victims of these permanent bans. What was done here was obviously wrong, but it was an exceptional circumstance that isn't exactly going to get repeated. He's not a scammer or a "danger" to the community, so a permanent ban seems a bit excessive to me.