godspeeed: Thats a tricky question and I lack the education adn experience to give any good suggestion. I hate the word Jail...
I would just put the computers of anyone suspected of serial bullying under investigation. Then you find porn, illegal softwares, downloaded music from limewire and then they would get busted for other shit
That would go against personal privacy and in the US alone would be overturned for being unconstitutional from day one. Besides they could log any bullying committed online via isp logs and such. They wouldn't even need to access your PC, thus rendering any searching of suspected people's pc illegal/unneeded/etc.
It all boils down to the fact that the net shouldn't be a kid's second set of parents, and people shouldn't be held accountable for every dumb thing they say because parents can't be parents and kids don't know any better about how to handle shit.