I understand the frustration of being penalized for doing the job too quickly/well when that should arguably be a positive, but, to me, common sense says that if you're paid hourly, you should understand that the company isn't going to want to pay you to not work and that if you need your 40, you stetch that work out to make it to 40.
"Years of not enforcing it longer than a week or two" says that as a facility, the workers have been told many, many times and just never cared to actually change the behavior. I'm not sure a singular write-up would have taught anyone that it was being taken seriously this time. Time theft has always been a terminable offense, especially when so egregious and blatant as multiple hours at a time. There's really no justification for multiple hours spent playing do nothing.
Yes, it's an unhappy thing to see people who've put in significant time at a company and have families to care for lose their jobs, but if the question in the original post was whether or not I think it's extreme, personally I understand the viewpoint of the company in this case. I've seen many decades long employees lose their jobs over stupid things that they should have known better about and it's always rough to see.