Oh, and specifically:
Yes, the ruler should be punished. He should be punished by having his people rise up and protest against him for being such an obvious crony-supporting idiot.
If you can't rally enough people to protest the ruler out of office after that...then clearly, the realm supports the act. Maybe it's stupid, maybe they're all stupid, but that's what the realm has, and you can't always change that.
Why would they do that? It is clearly an OOC issue
To me, this seems very similar to "place-holding" a ruler position, which I thought was against the rules.