I've never known someone who accepted a job offer and then turned it down to be actually punished for doing so. Sure, that employer might not offer them a future job but that's a different matter. If you want to have a system where you get banned from a future EC having withdrawn at the last minute, maybe that's a way forward. Banning someone from other events that aren't ECs seems weird.
Frankly, I'm fine with some sort of fine for the national federation, as it is them who are in control of the entries. Just not the individual athlete.
Personally, I still think that the easiest - and best - solution is a standby list. That's what a university would do. That's what someone advertising a job would have.
Again, I think that there has to be a degree of reasonableness here. We're still 3 days before any event starts, let alone a specific event that might happen later in the programme. There's nowhere in Europe that you couldn't get to Rome in 3 days from. There's no good reason to not have a back up list.
Hell, make the withdrawing federation pay the travel and hotel cost of the replacement athlete. Problem solved.