This incident sounds like an air safety issue that the FAA should investigate.
If you are a resident alien in Canada and you get a DUI anywhere in the world, your residency can be pulled and you can be barred from ever re-entering the country. Seems like a good idea to follow Canada's example in this one particular case.
You are right. The Pilot is the Captain of the ship and is responsible for the behavior of the passengers. Rather than putting on a gas mask, he had a duty to either stop the behavior or land at the nearest airport.