Hey gang!
Pretty shameful behavior, you've just screwed over hundreds of indie artists, often queer and/or otherwise poor artists. You've permanently scarred your reputation with indies and lost yourself a fair chunk of revenue, and for what? You could've chosen to have a moral backbone, and to stand by your users!
The only shot you have at remedying this is to undo your actions. You'd also better not have removed access to the things people have already bought, considering that that would be a violation of Australian Consumer Law AT MINIMUM, regardless of any T&Cs.
I'd advise that itch.io leadership take these considerations seriously, because by god other companies have lost so much over similar errors.