As someone that works in support for a hosting provider, you're the type of customer that irritates me the most. While they shouldn't be rebooting your box to get root access without your consent, you should at least help them help you. Give them an account with limited sudo access to view your logs. If that won't do, then provide them with the necessary logs. If that's not good enough, don't expect support and move your stuff to some place that doesn't provide the level of support you're paying for.

There are ways to configure a mail server to automatically report messages that are identified as spam to other blacklists.

Yes. (I work for a large hosting provider and see it among the most commonly used after Spamhaus.)

Again, some client-side utilities can be configured to automatically report spam to blocklists and spam digesting providers (i.e. pyzor).

But a lost sale is still a lost sale. If would really suck if one of those would have been a repeat business customer wanting to setup contracts.

Again, from someone that works at a large hosting provider, you're right. I think the biggest risk is the potential tarnishing of the business image. It sounds like the boss is in the knee-jerk reaction. He needs to have a cool head to gently persuade him and show him the business case for not responding. You have to show him that it makes the whole business look unprofessional and the competitor has already done that to themselves. If these are known customers, it would be better to contact them directly via some other means (such as a phone call). You'll do better to work on your customer relationships than you would to respond in such an impersonal and annoying fashion.