Member of Parliament and Cabinet Ministers are also subjected to the same laws and should be accorded the same treatment. For such a case, I would guess that a normal datacenter would have it covered under one of their clauses.
But if he is a first timer as he said, he isnt aware of it and stopped it when he knew, I guess maybe a warning CC to the datacenter would do. Doublecheck with your datacenter on this first. I would think it is a bit harsh to terminate the client in such a situation.
I don't see how you or your DC should be held responsible. The company posting his website URL may have violated blogs posting etiquette or rules for comments, but by no means do I see how it could be defined as "SPAM" or a cause to disconnect that customer.
For sites running forums or blogs it's their responsibility to police their own community and have safeguards in place to limit abuse.
Unless there's an actual violation such as copyright (DMCA), hate crimes, illegal content, etc that fall under your services ToS and countries laws you shouldn't be liable for it.
If someone takes offense, they should be putting pressure on the company in question through legal means, but apparently they're trying to take the easier route and put pressure on you first to see if that'll work.
Sounds like someone is abusing his position of power to pressure a company into doing something that really isn't necessary. Yes, blog link spam is annoying and if it were he doing it then you turn his site off. However if he hired somone to advertise his site or do seo and they are the ones who used a shady practice without his knowledge then I don't think he should be punished for it. Sounds like he's made every effort to stop the person he hired from link spaming. Make sure you let the colo know this too. However if the DC is unreasonable you need to back your data up just incase you need to make a hasty move.