First off, I love the idea that I Ilum is open to any level, even if I will never go there until level appropriate, that is kind of cool.
However, it seems asinine to hold a player accountable for an 'exploit' that the game allows them to perform, such as go to Ilum and loot higher level items. Either take away the ability to loot these items unless they are 40+ or just let it go. I prefer the former honestly, a level 4 shouldn't be able to get level 50 gear to simply sell.
Banning the account just seems a bit harsh, unless they are selling credits to a third party site...in that case ban them