This. Allison "says she knows what she did was wrong but that my husband and I shouldn’t punish her forever." It's not just what she DID, it's what she's DOING. If it had been a one-time encounter, Cindy still has the option of saying that she doesn't want to see her sister again; but this wasn't a one-time encounter. She broke up her sister's marriage, she's married to her sister's husband, she has kids with her sister's husband. The "punishment," if she wants to view it that way, legitimately lasts at least as long as the wrong continues.

And it's never the parents' job to "broker peace" between the sisters anyway.