Love to read some nuance on the topic. As much as we all repeat to ourselves to “remember the human”, it still doesn’t happen as often as it should.
Always good to remember that very few people are naturally and constantly toxic, most people are just normal folks and everyone has bad days.
I think it’d be a pretty dick DM move. I’d hate it. Gear comes and goes, but when I was a player I’d spend entire weeks planning how I would minmax my builds over the next levels. Getting sent back to square one on that would feel terrible. I get that you’ve only just started your campaign, so maybe your players aren’t that attached to their characters, but my players would probably still scream at me if I tried to pull something similar on them.