I support the concept of the fine in principle. Our taxes pay for those government bureaucrats. Wasting their time costs me money, so I would rather that United be encouraged to report properly. A fine does that.
That said, applying the fine at this time for this situation in practice was inappropriate. It is a new rule, with new reporting requirements, which I am sure were not well-described. The government should have slapped them on the hand, said, No this is what we want, do it right next time or we will fine you and that is that. No harm done.
The only way this fine should cause controversy with the three-hour rule is because United is playing with the facts, suggesting they were being fined for treating the passengers properly. They weren't being fined for how they treated the passengers, they were being fined for how they treated the government.