I agree with the bolded part.
The bold red part is where I disagree. They weren't being "a complete ass;" they were breaking the law.
Still don't think financial ruin for them is going to do anything other than never working in LE again, and going bankrupt. That's where I agree with you that the penalty should be done in such a way that the agency (and others like them) will do the training and prep to avoid such a situation in the future. Criminal charges might be one thing to pursue.
I would imagine any department of significant size has someone (or group) in charge of training. I would say that those people would be at some level of fault also.
I understand, but we all break the law. The real question is whether it was willful and intentional. Did the officer know it was legal and harass the citizen anyway? Does the agency understand the law, and is that effectively communicated to the officers? If the answer is yes to both questions, the officer needs his state certification revoked (no cert, no LE job). If the answers are no, then focus on the training.