For the record, I am fine with the blue that is used by many folks here.
I think what Username may have been referring to is that funky bluish-purple that only shows up when the level below banning and above post moderation is given out.
Just in general, the levels of discipline on the Ladder are:
-Public warning (the green dot)
So, if a person is already in the Warned status, and then commits three infractions, this person is actually subject to being banned. 5 infractions while warned is especially egregious.
Any action is taken with the consensus of the Moderators. No one person can go out and discipline anybody; there has to be agreement among the moderators. I can, and have, overruled the Moderators before, but 90% of the time this is actually to soften the punishment.