"PAYGO API access" vs "Monthly Tool Subscription" is just a matter of different unit economics; there's nothing particularly unusual or strange about the idea on its own, specific claims against Google notwithstanding.
Of course, Google is still in the wrong here for instantly nuking the account instead of just billing them for API usage instead (largely because an autoban or whatever easier, I'm sure).
I doubt they would have the ability to charge them for it. They never signed up for api token usage?
The ban hammer is the scary part.
I am afraid of using any Google services in experimental way from the fear that my whole Google existence will be banned.
I think blocking access temporarily with a warning would be much more suitable. Unblocking could be even conditioned on a request to pay for the abused tokens