The rule was in place. Ignorance of the rule is not excusable in any legal system that I'm aware of. I agree - but I'm not clear how this relates to "ethics." It is clear that they had the opportunity to know what the rule was. It has been stated by a member of the team at the time under consideration that the athletic department and the coaches made the rule clear.
Since the story broke we have been told by the AD and the HC that it was something not taught -- clearly trying to CYA for the athletes. By the players that it was money spent to help out the family, not for tattoos. We have subsequently discovered that both statements were false. I don't believe we've necessarily discovered any such thing - at least, not across the board. Besides which, I draw a distinction between "CYA for the players" and protecting young men, even if I don't think some of that protection is warranted. I don't have a big problem with "white lies" in cases like this.
If this team is, as advertised, a family then this is a case en loco parentis and the parents (i.e. the Athletic department, the coaches and the university) have the obligation to make and enforce the punishment, not to push that responsibility down on the oldest siblings. Not clear what you mean by this, nor, again, how it relates to "ethics." When it comes to NCAA violations, neither the university nor the athletics department is empowered to override the NCAA when it comes to sanctions.
In essence the actions of a few have a great impact on the lives of many. To allow them to play seems to me to validate a sliding moral code -- yes, that was illegal, but not bowl game illegal behavior. It suggests that we can neatly compartmentalize just how illegal depending on perceived impact in the eyes of several interested parties.
For this, I find fault in the players (thanks Script O), the athletic department, the university, the BCS and the NCAA, All have failed to step up to the matter squarely. So because you personally would have designed different penalties, all these entities have "failed to step up." That seems like a pretty self-important position.
If this is not an ethical issue, then how is the Cam Newton situation any different?