Read these threads:
http://www.flyertalk.com/forum/showthread.php?t=867740
http://www.flyertalk.com/forum/showthread.php?t=872837
http://www.flyertalk.com/forum/showthread.php?t=873424
http://www.flyertalk.com/forum/showthread.php?t=881557

You'll see that folks who are having their credit cut are pretty unhappy - not surprisingly - and that it isn't happening that way to everyone.

As for whether they are doing the right thing or not, that can be evaluated on many levels (short-term financial, long-term financial, customer service, etc.) and I don't think any two people will agree completely on that the same way no two people will agree on the value of MR points or the best redemption plan.

For me personally the answer is that I'd like to see the company stay in business and I'd like for them to do so without screwing over their customers. Apparently that cannot happen so I guess I'm asking too much.