Dante-
In the analogy though, the child is Michael, and our goal is not his long-term well-being, but getting him to stop vandalizing the Wikipedia. Therefore, I hold that option 3 (never giving him sweets -> always reverting everything) is the best way to handle the situation.
Actually, if Michael *responded* to positive feedback and would allow us to try to get him on the right path, that would be a neat strategy. But as has been noted already, Michael is very probably a mentally ill person who is not fully aware of his actions.
The problems we have to address are technical; mainly, we cannot deal well with vandals who use changing IP addresses. I have proposed a solution previously: to have automatic expiry on IP blocks. This would allow us to comfortably ban all the AOL addresses he uses without major harm done. A ban can last just a few minutes, the vandal will not not know that and switch the IP address regardless.
The feature freeze has delayed this, and right now I'm a bit busy. It would be fairly simple to implement, though.
Regards,
Erik