Mental illness makes it very difficult to reason with the sufferer, and people who have no sense of reason can be dangerous.
Indeed. The inability to follow logical thought and reason is a criteria of mental illness. And some conditions can indeed be dangerous.
When they overstep the mark
But by the main criteria of mental illness, which you established, how can they know where the 'mark' is, to overstep it?
then they must be prevented, or punished... as they cannot be cured
Prevented, yes. But I'm curious as to how you would justify punishment for an illness. Even murderers found to be insane are not imprisoned, although they are removed from society, as they ought to be. Perhaps people who drink too much - or drink at all - should be denied NHS care and possibly locked up? Or those who eat too much? And how d'you know they 'cannot be cured'?
That is what happened with the guy in the article, he caused real distress to others.
No, we only know what the reporter wrote, and that may have been embellished. Not uncommon in the news business.
Mental Health has long been the Cinderella of the health services, yet the ramifications of these conditions are enormous, damaging families, destroying careers and often leading to death as sufferers take their own lives. Not really a subject for off-hand humour.