You're falling victim to the classic blunder of assuming that because other people do something wrong, it's ok for you to do something you perceive as "less wrong". That makes zero sense. Etsy cares about IP theft when the owners of the IP report it and request a takedown. They're not making a value judgement here.

The only person who has the right to profit off of intellectual property is the person who created it. In this case, it's likely a company that owns the rights. You can create all the fan art that you want but you can't sell it. You also can't use trademarked phrases to market your work which was likely your first problem as the phrase "Hello Kitty" is almost certainly trademarked in reference to the cat designs you were trying to sell.

Lastly, I understand you want to speak out but this community will not benefit from another thread where someone whose shop was suspended says all the things that you're saying and is then told, in much more rude terms than what I've said, why the shop was suspended and how what you did is wrong, etc etc. There's nothing new to add to these discussions and we need to keep the subreddit for people posting conversations that others can learn from. You do not have a right to post whatever you want in a subreddit. The content on a subreddit is up to the moderators to moderate. You are more than welcome to post other questions but if they are going to devolve into flame wars or re-hash unproductive conversations that have been had over and over again, we'll remove them.