Mmm, well this is something that will affect everybody differently. There are basically two schools of thought.
1) I pay for my parking and don't over stay.
2) It's only staying a bit too long in a b****y parking space. Not exactly crime of the century is it?
It also depends why the restriction is in place and why you're there. A two hour free parking space will be to allow enough time for people to park, do whatever they came to do, and then go again. A lot of people who work in an area often take up the free bays, which means the people who go to an area for business can't park so they just go somewhere else. Which is a bit self-defeating for the businesses.
Some restrictions are there solely to assist the observation of people emerging from a junction, yet drivers often park on the DYLs at the end of our street. Some of the cars parked on those lines are visiting the Chemists about 50 yards away. They can't actually park in the free bays because around 6 of them are occupied by those who work in the Chemist. Plus there are vans that deliver and almost all have to park very close to the junction making visibility a nightmare. If the local council make the free bays limited to two hours then the staff will just park in our street which means it will be more dangerous to get a car off the drive or, make it impossible to get off the drive because you're blocked in.
Having said that, nobody is forced at gunpoint to park where they shouldn't; their children aren't being held to ransom. People park where they do of their own free will. The gentleman in the BBC article left his vehicle there for three hours when he should have stayed for only two. You could argue that he was being selfish and arrogant and couldn't give a toss for anybody else. As a driver you know what the regulations are and you make a conscious decision to leave it there.
How much should you have to pay though? Well, everybody derided Traffic Wardens when they used to enforce parking and they were done away with. They were replaced by what is now generally referred to as Civil Enforcement Officers, and they are often employed by a private company. The function of a company is to make profit. Still, they enforce the parking regulations set by the local council.
Most of these companies operate on the basis that if you pay the charge promptly it is halved, so it's probably fairly safe to say that if he'd paid it straight away then it would probably have cost him around £40. He also didn't appear to challenge the issue of the ticket, merely the cost which probably made things a lot worse for him.
It's also worth making the distinction between a ticket issued on a car park and one on the road. A ticket given on a car park should only really allow for the errant driver to compensate the car park owners for the loss of revenue, but the company administering the car park will slap a hefty administration charge. It would be interesting to compare Parking Eye's charges on a car park as opposed to a road. Also on roads there is a Road Traffic Regulation Order which states exactly where you can park and how long for. There also needs to be lines marked in a particular way that must be clearly visible and to a certain specification. There must also, with some restrictions, be plates mounted on a vertical surface nearby.
However, returning to the Traffic Warden vs. Civil Enforcement Officer situation, I can't speak for other areas, but in Manchester the full cost of a PCN is £70. GMP only charge £30. The reason is that the Police can't make a profit out of fines, private companies and councils can. Having said that, the only place GMP enforce parking regs. is at Manchester Airport, and that's from a security point of view.
There is a cynical viewpoint of the ability to discount a PCN, and that is that, especially for a ticket issued on a Friday or at the weekend, a driver has less time to research a challenge to it, so they are more likely to pay it.
How much is a reasonable penalty? On the road, that's probably along the lines of how: long is a piece of string? On a car park though is a different matter, which could be think of a number and then double it.