Often the first question people ask about the decision making leading up to an accident such as Columbia takes the form of: “why did NASA continue flying the Shuttle with a known problem…?
The Challenger and Columbia pilots were licensed though...and they didn't suffer from epilepsy. Both shuttles were lost due to complex problems with the aircraft that were unknown at the time of the crashes, not due to the pilots suffering from pre-existing medical conditions, having their licenses suspended and flying anyway.
There's hindsight and foresight. CASA had the foresight to restrict Hempel's license but apparently lacked the means (or will) to enforce that restriction. To me, the restriction of his license illustrates that they were aware of a problem, unlike the NASA people who in both cases knew of a number of seemingly unrelated issues that came together and caused the accidents. This was not an accident caused by a structural failure; in an old aircraft that would have been understandable and acceptance of that risk forms the main part of the disclaimer. This was an accident caused by wilful pilot error.
This guy shouldn't have been flying passengers, he was told that, prohibited from doing that, he did it anyway (repeatedly) and the regulator didn't, or couldn't stop him. That's a problem.