First of all, "ye olde Av+/Av-" is illegal, and has been for years. Either there is an infraction and damage, in which case you work out an assigned score, or there isn't, in which case the score stands.
Second, was there misinformation? The Law book instructs you to assume there was without compelling reason to suppose otherwise - and there is no such reason otherwise. They clearly have no agreement to play capp here.
Third, "did themselves in a bit" is not sufficient reason to deny redress. N/S are in a situation caused by an infraction by opponents. Even in North America, where people are least sympathetic to the non-offenders, you only deny redress where there has been a complete failure to play bridge, an egregious error.
Fourth, before ruling, you find out all the facts. You say "how would South safely stop?" - that's easy, you ask him! You should find out what he was going to call next if opponents had passed.
Fifth, there was misinformation. Now, was there damage caused by it? This is the problem - it is not immediately obvious that there was. What would have happened without the 2
bid? Personally, I am inclined to think the auction might have been the same. So, what would have happened if N/S had been told 2
was natural? Perhaps North would have bid 2NT. OK, that's good enough.
Sixth, what would happen in 2NT? East might lead a heart or a club - he is not allowed to "know" 2
is natural - and eight tricks now make. So I would rule 2NT making.