Thanks for all the comments.
The most disturbing thing to me about the whole thing is that now apparently merely "condoning" fornication is grounds for DF - you don't even have to do it yourself. By "applying the principle", it seems that "condoning" smoking, or blood transfusions, or whatever else makes the DF list, would now be grounds for DF as well.
And what constitutes "condoning" such actions? So, say, a non-believing JW son or daughter is in a car wreck and gets a blood transfusion. Is the JW parent "condoning" the transfusion if he lets the son/daughter continue to live in his home while recuperating? Will he lose his privileges? Get DF?
What if the unbelieving son or daughter smokes at home?
What if the unbelieving son or daughter only smokes at work, but not at home, and the parent knows of it? Is he still "condoning" it?
If not, what about the case where the unbelieving live-at-home son/daughter fornicates like a hormone-imbalanced rabbit, but always does so away from the parents house? Is that acceptable? Or is that condoning too?
JW elders are trained to be legalistic regarding these BOE instructions. If I can think of these situations in 30 seconds, I'm sure there are elders out there who will "go nuts" and look for similar reasons to "keep the congregation clean". Or as vaguely similar situations occur in their congregations, they'll pull out this letter and ask, "So, is Brother So-and-so condoning this action? Do we need to form a committee?"