It’s an unethical, false choice. The reviewers are not perfectly rational agents that do free work, they have real needs and desires. Shame on ICML for exploiting their desperation.
Is it? The reviewers could simply have chosen a different option in a form field. While I understand that they were "forced" to review under reciprocal review, they still had other choices where I don't see coercion happening and that could have avoided the outcome for them.
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Banned for life is a stretch but the actual response is completely fine. They can just resubmit to the next conference.
Words mean something, if you promise to uphold a contract and break it, there are consequences. The reviewers were free to select the policy which allows LLM use.