I strongly suspect that there was a lot more to it than cowboy costumes and off-color verbal insults and underage drinking. The "more" probably involved things which would classify the perpetrators as sex-crime felons and the victims as sexual assault victims. To avoid public embarrassment of the victims, bad PR for the college, and lifelong criminal records for sexual assault for the perpetrators, the administration and prosecutors probably arranged a plea deal, since it was possible to mete out a legal penalty based just on the information that we're getting here. These "students" are probably getting their real punishment at home, where parents are asking stern questions (perhaps after having been given plenty more info about what actually went on, than we're getting), and reevaluating whether they should be paying for live-away-from-home college education for their miscreant offspring.
You have no idea how PC things are here. What they described is more than enough to get the stated punishment.
Could be. But it's certainly not out of the question that what occured was simply immature, testosterone overload as well. I saw alot of different activities at frat houses and while the majority of these tended to be overtly and patently stupid, most where done in good fun by willing participants.