A law student I know sent me a link to a paper he wrote on using mediation to control virus-writers.
The title of the paper is "Taming the Internet Wild: Punishing and Deterring Virus-Writers and Script-Kiddies Through Victim-Offender Mediation" and you can find it here.
As he explains on the site where the paper is posted, he wrote while he was on the staff of a law review, but the law review did not publish it.
So, he's been kind enough to release it for public review via his blog. I think you might find it very interesting. As he says on his blog, most of the paper deals with computer virus writers and the nature of the crimes they commit; he didn't get to include all that much about why mediatiion is likely to be an effective way of controlling this type of activity.
Still, though, I think you might find it an interesting read. And you can contribute any thoughts you have to his blog, address given above.