The most confusing thing about this situation is how the hell did Birmingham spend so much money, and end up with such a rubbish squad?
Zola and Redknapp between them basically spent 30 million quid to make the team substantially worse. I bet the board wish they could go back and undo Gary Rowett's sacking when they were on the edge of the playoffs on a reasonable budget!
I guess they're the counterpoint to Wolves. Wolves spent a stupid amount of money - but had a good manager who spent it well, and therefore they're now riding high in the Premiership and have a good shot at winning the FA Cup and playing in Europe next year (via Cup or League). Birmingham spent even more money, and wasted it on dross - and as a result are in danger of relegation this year, and presumably in financial turmoil for the foreseeable future.
If this sort of points deduction dissuades other clubs from putting their future at risk......it's probably a good thing.