Well, to be fair, it takes many players an entire season to get to honor level 5 from honor level 2. I think it could be considered “harsh” to lose your chance of honor 5 from one punishment, but I don’t think so personally. I have a friend who had a bad couple weeks and got a chat restriction, dropping him to honor level 1 and locking it (this was at the beginning of last season, in like March or so). He ended up getting honor 5 right before the end of the season. He does tend to spend a lot of time playing though, so I’m not sure if this is possible for your ‘average’ player.
That being said, the minimum requirement for season rewards is Honor 2, and you still unlock rewards for each individual honor level above 2 (various colors/levels of rewards). I do believe that the maximum level of rewards (honor 4/5 rewards) should be reserved for those players who display continuous and consistent honorable behavior for an entire season.
It should be noted that the only way to lose honor progress is with a punishment - you cannot fall in honor unless you are punished. Your forward progress may be slowed by any misbehavior (regardless of prior punishments or not), but you won’t lose the progress you’ve already made. Given that it takes a decent amount of toxicity (generally) to get your first chat restriction, and if you’ve had 3-6 months of good behavior after it it takes a similar amount (your account would be back in good standing), I’m not sure it needs to be lessened.
It’s important to remember that a punishment is designed to be just that - a punishment. It isn’t meant to feel good, and if it takes loss of honor rewards to convince people to reform, to me that’s a sign that the Honor system is working as intended. People want the rewards, they will realize that they will not get the rewards if they misbehave, thus they try to not misbehave.