I am commenting here as an outsider, as someone who has never been to Antarctica:
This seems like something of a Catch-22 situation. You are required to follow rules, on jeopardy of termination, yet the rules are not stated. Jello wrestling had taken place before and was tolerated, or resulted in a lesser consequence than termination, but now (with out a clear, stated change in policy) results in termination.
I can understand that administration can't possibly create a specific policy for every permutation of human behavior. However, I do think that a general policy about recreational activities could be created. I am thinking that the policy could be based on the number of participants (ex: more than ten), or the use of facilities (activities in certain areas MUST have a permit), or aspects of the event (alcohol will be consumed, etc.).
I envision a system where the application process is quick and simple, and inclusive. Want to do a Jello wresting event? OK, but you have to pay for the materials used (jello), you have to have a person there that is sober and making sure that the event is as safe as possible (hopefully less broken feet this way), and that the facility must be cleaned and ready for use by a certain time (noon the next day).
At the very least a system like this would allow administration to avoid embarrassment, would hopefully allow people to blow off steam while maintaining some safety. As well, I think if you are throwing an event that is off the books you have the preknowledge that you may be taking a risk in breaking the rules.
So I say: Jello Party, great: you guys pay for the Jello, have a sober person on hand who is in charge of safety, have the place clean by noon the next day.
Obviously no one wants VIPs walking into the aftermath of a Jello party. This seems to me to be the best way to prevent it, by being aware of the event and either postponing it or making sure it is cleaned up toute de suite.
Just an observation from somebody with absolutely no stake in the proceedings,