A number of facts are in dispute, or at least the interpretation of a number of facts, and that's why this case potentially "...puts all IT admins in danger..."
The city claims that Terry took a number of nefarious actions that endangered the network. They claim that he installed multiple modems connected to the network to allow him to access it without logging or auditing. Connecting a modem to the console port of a router or switch is a common back-up access method. It's the only way you can remotely get to a network device if the network is down. When you connect, you still need the username and/or password to get into the device and that access can be logged. It's no different from connecting your laptop directly to the console port.
They claimed that he disabled password recovery on network devices to prevent the city from accessing them. But all of the devices where password recovery was disabled appear to be devices that could not be physically secured. Disabling password recovery is, again, a common practice for devices that are physically accessible.
They claim he had sniffers installed on his computers in order to snoop on the network. How many network admins out there DON'T have a sniffer program installed for troubleshooting the network?
After he was arrested, his pager was taken and it went off with an alert from one of the routers. The city claims this was unauthorized access to the network. Again, it's extremely common for network admins to have monitor programs that send out an email or pager alert in the event of a failure.
I agree that Terry handled the situation poorly and was probably a bit of a jerk. But the city's attempts to pile on the charges in an attempt to get back at him do threaten to set dangerous precedents that could come back to bite any system or network admin.