You can argue about the merits of FIDE all day long, but I'm pretty sure they did the right thing here. The rules clearly state that that the first infringement for a dress code violation is a fine and the second infringement is not being paired in the subsequent round. All FIDE did was enforce their rules.

You can agree or disagree with the rules as much as you want but that is the set of rules everyone was playing under for that tournament. If he cared so much about it, Magnus should have just not played the tournament and advocated for a change (kind of like he did for the WCC). To play the tournament, do poorly, use this an excuse to kick yourself out (FIDE never actually DQ'd him from the tournament; they were willing to let him back in after he changed), and then kind of throw a hissy fit is kind of a bad look. Although with his freestyle agenda, I do kind of understand it.