We've always had a policy that almost anything goes excluding human rights abuses and especially war crimes and supporting violence. Nothing changed here.
Honestly, if Namecheap wants to earn my respect back after this their only option is to ban me and their other US customers for the crimes of the US government, but they won't because the US market is too lucrative for them to lose.
Well from their website they have 3 offices and 1700 employees in Ukraine so I'd guess this hits a lot more closer to home for them than your simulated conversation suggests.
I would have assumed that to mean, very specifically, that you wouldn't do business with, for example, a Private Military Contractor accused of human rights abuses. The specific business. Not brushing off the individual citizens of an entire country collectively, no matter their agreement with the war, for the issues you have with the country's governance. In some cases, they would have assumed themselves safe with you, in fact, because they were not seemingly aligned with their government and more aligned with Western values, and thought you would be more censorship-resistant. Far from them, I am certain, would be the idea that you would be the first to threaten their domains when they can't even pay for another registrar. (Which is another thing that would have been a good reason for, say, a Russian activist to renew with long 5+ year terms, which... Are you going to refund those? Or just tell them to figure it out?)
I mean, I can understand where you're coming from, but it's a stretch. I would not think that's what the language means in the terms. At all. It would make an activist's day 1000x worse. Imagine if they're right now being detained and can't renew or move their domain (and this is why they took a 5 year term with you!) and they can't even see this email or this discussion. You might make the worst week of their life into a much worse one. It seems bad for business. Just saying. Older netheads expect the net to be censorship resistant, not ban-happy, for what it's worth.
Or are you just disenfranchising a population in order to gain virtue points?