I tend to agree, "giving the chop" should be a last resort. I helped a flight school owner set up a career pilot program, and learned a lot from him. If a student was not progressing, he and the chief pilot would set them down and work with them. He was honest and told them where they stood, and that no shortcuts would be taken. Many of them got through their training at great cost to them, but they made it.
The same guy also had an "idiot clause" in his terms and conditions agreement. Basically, you show a haphazard or dangerous attitude toward flying and you can go somewhere else.
In one case they had a student come to a lesson with alcohol on his breath. He obviously didnt fly, and they had a serious talk with him and put him under close scrutiny. Personally, I would have summarily shown him the door off the property.