I almost never used Steam, but I remember this much:
If you buy a game and gift it someone overseas, it's good and works perfectly fine (According to some of my friends and people even here, the TOS on Steam says so).
The user in question was getting payed through PayPal by overseas people to buy games at reduced prices. They weren't being gifted with, for a lack of better terms, 'free gifts'. What this user was doing is against the terms of service. Not because it a bad thing he was doing, but because he was working as the middle-man in the entire thing, and that is illegal when money is involved with one side of the part being a vendor and the other the buyer.
For a lack of better expression, let me say it this way: you send you Uncle 20K to buy a Mini in the US, at which point he will bring it back with him to...lets say Romania. In Romania, the Mini costs about 40K, because of demand and lack of such a car in a country which is used to more in brand names, like BMW, and etc, long complicated story but you with me?
Your Uncle will have to pay Taxes first upon arriving in Europe and secondly to enter said country (Romania) if the car is to be 'imported' or he can simply drive with it and make it his own if he gets a temporary plate to avoid all this, at which point, you get the car, but still it was illegal because HE BYPASSED PROTOCOL STANDARDS TO GET YOU A CAR WHICH WASN'T A NORMAL GIFT, since you payed with your money and avoided the governmental regional tax in the first place.
Not the best example, but let me finish it up.
Steams abuse of the exchange rate has been long overdue done and needs to be changed, people in Venezuela need to pay sometimes well near 200$ for a single new copy of a game AT RETAIL STORES, so Steam is kinda a break for them since they don't need to pay so much by greedy shop keepers. Also, Steam is not all to blame here...don't forget about the Dev's, a few indie ones actually made it their crusade to screw people wallets.
However, instead of the smart-arsed people, complaining about how Steam is banning a guy for all the right reasons, why they don't make their voice heard at Steam, and ask them to insert a baseline conversion? I'm pretty sure, delaying the public release of a game by a couple of days, to get exchange rates correct based upon IP from country (at least the ones who are stable) would shut up a great many deal of people...if not, they can all go back and just enjoy what they have, because some people, still pay 200$ for a copy of Dead or Alive on the PS2.