Idk, that'd depends on the severity of the infraction, up to the magistrates to decide. I think you can get quite creative with this.
Pausing would remove them from their positions, cause their units to disband, and (I think) cause their bonds to be redistributed. I do not recall what would happen to their gold on hand. We'd have to consider these effects if we were to use this option.
We could set it up like a vacation pause that expires within a set limit. Sort of like locking an account I suppose, but only one character. The only thing is, I'm having trouble envisioning when we might use this.