"Those internal communication mean nothing"
In prosecuting copyright cases, internal communications mean everything. I'm not speaking in the abstract here; incriminating emails were instrumental in the Napster case and some other major copyright cases, going back to the BBS days. It's an all-too-common pattern: publicly, the company claims that it doesn't know that copyrighted information is being shared in an unauthorized manner; their internal emails reveal that they do know this; plausible deniability is destroyed; game over.
This is central to the concepts of contributory infringement and vicarious infringement. The former is when you know infringement is happening but you do nothing to stop it; the latter is when you're ignoring it because there's a financial incentive to do so.
"The point being, is that just because something seems to be illegal - doesn't mean it is, you/we have NO idea if the customer in question has some kind of weird contract with the copyright holder and if they are in violation of it or not - THAT is up to a judge and/or contract attorney to decide, no one else."
Agreed, compliance can be a hassle, and the more customers and activity you have, the bigger your exposure, which is why ISPs, file lockers, Torrent sites and the like must have sufficient staff for compliance with copyright laws, just as they require sufficient staff to ensure compliance with other laws (everything from Sarbanes Oxley to workplace safety). From reading your situation, it's clear that your ISP is one of the "good guys." However, it's not analogous to MU. It wasn't an issue of not being properly staffed to handle takedown requests, or even legitimate concerns that the requests were bogus -- it was deliberately ignoring the requests because their business model required it.