I am playing Egypt, and had been allies with Israel for the entire duration of the game. Ling was alot of fun to play with and is a very good player. I would definitely play with him again. He made a huge blunder and he regrets it to a very large extent. I don't know that he needs to be "punished", he has punished himself enough with guilt and regret, but I do think he could use a break from diplomacy, for his own sake.
In terms of the outcome of this game and the impact it had, I don't think it is calculable. Playing two nations doesn't just give you more units, the main benefit is from probing for information from 2 "independent" sources. Knowing who is lying, how stories match up or don't, and coordinating units in a timely fashion across the globe (fall of USA as a key example, but also Russia). He seemed to have alot of accurate "hunches" as to what was going on around the globe, and I think a large reason was that he had information from 2 nations. I don't think it is an understatement that the outcome of this game has been dramatically altered for many major nations in the game because of this, it is hard to predict what the map would look like under different circumstances, but I imagine it would be a MUCH different map than it is now if only because of domino effects.
I think he wanted to get out of it sooner, or come clean, but he was in too deep and there was no good "out" solution for him until he was directly confronted. He isn't a bad guy, I think the frustration of this type of game really got to him and he made some terrible choices.