I think banning developers just for giving users freedom would be bad for PR. Google would have to admit that they are fighting their own users, not fighting malware.

It wouldn't be any worse PR than the current one. They'd use the same argument to ban that guy's app as they use now to ban sideloading. That it's not secure and it's a protection of users to ban it.

This is "one weird trick" thinking, but there's no tech-based counter if the device manufacturer is determined enough.