Every situation should be weighed and judged accordingly.
People who show current (Yes current is 2011 as well...) interest in scamming and/or black-hat activities should be outright banned no exception, then if they were to pardon 6 months later, they could be evaluated and again judged accordingly (Real world thieves CAN be incorporated back into society, but giving too much rope can just create relapse).
Also the offense should be weighed. There's definitely a difference between someone who shows extreme interest in RATs and some dumb kid who pays a few bucks for a phishing set-up or something. I say this only because people who do stuff like rat/key-logging also have a pretty good sense of manipulation, they're pioneers in the art of deception, they know how to talk, which in my opinion just destroys your character all together... These people gotta go. To be honest, if they're currently involved in it, I wouldn't be letting them back for a very... VERY long time. You got caught red-handed.
On the other hand, the dumb kid who paid for a phishing site doesn't really have to have much knowledge aside from advertising the site. The creator of the phisher did the deceptive work, the dumb kid just paid for it and has to do the easy part. Dumb kid SHOULD definitely be punished, but say if in 6 months they have something to show about their character, I could possibly see them be integrated back in the site.
Bottom line, if you do the crime you SHOULD do the time. It should all just be weighed though.
Edit: When I say current by the way, I mean in the past 4-5 years seems current. I also believe that if you have a background, if you've scammed/phished/hacked etc., and EVEN IF YOU HAVE CHANGED, you should still make your crimes public and be punished accordingly. There's just something about being caught red-handed by someone else that deters every ounce of resourcefulness and sincerity...
Not to mention, even if you think your scam back in the day was petty, it wasn't - and if you're truly sorry you won't have any problem coming forward. You can't just sweep something under the rug and pretend like it never happened, YOU DESERVE TO BE PUNISHED FOR IT, just like that person was punished in a way when you snatched their geepee.