I don't believe universities should have police departments (or really that any private organizations should have police departments, or even quasi-government organizations like transit agencies). University police essentially exist to cover up rapes on campus. In general they're underresourced and get used in a weird "quasi insider" role.
I don't think a competent IS&T would have gone directly to the Cambridge police if there were no MIT police. The "oh no, China!" thing is BS; traffic analysis would show that the china logins were (presumably) ssh portscans and not real connections. Basic network monitoring would show that this was just a badly written scraper and not anything more malicious. Odds would be that it was a MIT student scraping, and calling the cops on a MIT student for scraping a resource like that would have been bogus, too.
I love how MIT tries to pin blame on their budgetary cutbacks and staff furloughs, too.
I also think aaronsw was a moron in several ways (not rate limiting, not treating the box as a throwaway encrypted box, general behavior, and ultimately killing himself), but I'm more willing to cut a 24 year old slack than a multi-billion dollar endowment university which claims to be at the forefront of science.
Today I'm kind of sad I dropped out of MIT to do a startup, because it means I can't burn my diploma and promise to never donate to MIT. Oh well.