If they want to change and fix the problem, you don't start by letting the flamers win. You start by taking the big PR hit and losing a few hundred/thousand bullies, and essentially start over with the good folks and new rules.
You make the presumption that over fifty thousand negative posts in 24 hours by paying customers are a bunch of bullies. You are mistaken. They listened to their own paying customers. This is what companies are supposed to do, isn't it?