Wow. I've been off the forum for a little while and just got through reading this entire thread. Lots of points and counterpoints on this subject.
We have established that a SM can't take rank away. That is true. I wouldn't use that as a threat when dealing with unruly Scouts, unless I was really good at playing poker. It's a bluff.
What I would use is the fact that Scout Spirit must be demonstrated as a requirement of each successive rank, along with living life according to the Scout Oath and the Scout Law. As a SM, I have no problem telling Scouts, families, the Troop Committee, COR, etc. that little Billy Bob will not advance to the next rank until he corrects whatever problematic conduct issues he has. As a SM, its my call when a Scout goes before a review board to try and get his next rank.
Case in point. I have a 2nd class which transferred from another unit. A few weeks ago, I noticed him not showing up in uniform. When asked about it, he said: "I haven't changed patches on my uniform yet." At that point I tell the Scout to bring in his uniform and I will sew the patches on for him. Its a standard service I afford everyone in my Pack and my Troop. A couple of weeks go by, the Scout is still not in uniform and has not brought it in for me to fix. A ask him about his uniform, and he replies "I just don't feel like wearing it." At the next meeting I pull him aside, along with the SPL and the ASM, and inform him of the requirement for showing Scout Spirit to advance. I also inform all involved that the Scout will not advance if he doesn't fix the uniform problem. At the next meeting he wears his uniform, takes it off after the meeting, and asks me very nicely to please sew his patches on it. End of issue.
I realize that this is a very mild case compared to Scouts pulling knives, shanks, guns on each other, but the basic principle is there.
If and when bigger problems occur, we developed a Pack/Troop Code of Conduct that is handed out to all newcomers to our group. It states what is expected of them and the price that will be payed if the code is violated, up to expulsion from the Pack/Troop.
So far I haven't had to pull that trump card, but its there when I need it.