Having only read the article linked to, I can,t determine how good a firearms instructor this individual was, nor do I have any personal experience of firearms training other than the most basic relating to air rifles and shotguns - but the systems in place ( keeping ammo in an old tin, no way to distinguish between live and blank ammo etc, no records/ receipts kept etc), pointing of a weapon directly at one of his audience, then pulling the trigger whilst still aiming at the individual - These all sound highly unprofessional and highly theatrical procedures to me.
He should be punished, of course he should - He was very lucky that one of his own colleagues didn't die as a direct result of this instructors actions.Given his failure of the course or part of the course, should he have been instructing at all? I don't know enough, but it doesn't sound professional.
And jtp is right - Is a fine the most appropriate way to punish a public body? The problem is trying to think of a suitable alternative, that effectively punishes the transgressors, penalising them sufficiently that they will genuinely seek out and instigate improvements, without effecting their operational budget and consequently reducing their service levels to the public.