I've rarely had to punish PCs except for cheaters, and maybe one annoying drunk. Last we saw of his character he was fighting a nasty case of food poisoning in a hostlie wilderness...
I've actually been much harder on PCs when I'm playing (9 PC kills in 3 battlelords sessions, including two duels and a a few flushed out an airlock for not listening), though my old Ninjas & Superspies group might disagree. I swear it was just coincidence that one PC got crippled, another suffered a debilitating brain injury, and a third died when he was blown through a wall and fell three stories into a truckbed (through the roof of the cap on it) the night after a bad date.
I've also been known to allow PCs to plot against each other sometimes (mostly in Vampire and such) but a memorable one was a MechWarrior campaign where one PC bribed another's technician to wire his auto-eject into his fire control computer. Everything seemed normal until the guy triggered an alpha strike and got sent for a jack-in-the-box ride in the middle of a firefight. Of course the guy that arranged it all quit laughing when he realized he was left with no backup against a Demolisher in a city. His head got blown clean off a round or two later...
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