Having no experience with what happened, I can only offer insight through means other than witness account. This doesn't seem to be the first time Nelth has had an issue with players:
http://www.conjointgaming.com/forum/index.php?topic=7893.0Looking at the punishment standards for TTT, the issue in this link seems to be a wrongful ruling. As listed for admin disrespect, he is not required to warn for gag/mute for such an offense, and the hour ban was WAY less than the day ban suggested for admin chat abuse.
Now, regarding THIS issue:
It looks like, from my point of view, that this was either a misunderstanding, or an admin having a serious problem. As to which, I am not able to say.
At any rate, even if Nelth is found to be at fault, I would push for no punishment as of right now. In the original thread, the following was posted by towersheep:
Nelth, I looked in the logs and you never gave him warning. No mute nor gag either. If you do this again you will face suspension or possibly admin removal. I'm not going to take any action now as we are used to the MOTD being our warning and it is currently buggy.
That previous "offense" is complete crap and should not push Nelth into a corner right now.
In the future, I suggest someone to amend the TTT Punishment Standards to include a CHAT warning for singing/whistling/etc. This would make for a less debatable standard, and an easier one for patrons to follow when they get warned. It may be a little more work for the admins, but it would pay off.