Local reds should be punished on Syndesia, since it's (ostensibly) for faction-v-faction war, not ganking.
I'd go so far as to punish any city on Syndesia that has reds as citizens. From a faction perspective, that's like a nation harboring pirates, bandits, or terrorists.
So, I'd consider things like the following for cities with too many "Red" points on Syndesia:
Debuffs during sieges
Increase upkeep/crafting gold requirements
Divine reward drop penalties for all citizens of the city
Ideally, reds on Syndesia would be from Tartaros during invasions, not local cities, and Tartaros reds wouldn't be debuffed. If you're a peaceful Syndesian out gathering during the invasion window, your blood is on your own head....