I support the pets from banned users being deleted, with a few rules.
Of course, there would need to be a time limit for accounts who were wrongly banned or whatever happens when some accounts become unbanned. I believe a couple of months is long enough to question why your account was banned/inquire about getting it unbanned.
As Yaiz pointed out, they could be watching for the pet, so perhaps releasing them into the forest would be a good idea. Even if we simply released the names, if it were albino or something, the user would have to work to get it back onto that pet.
Also, people who want certain names could be looking out for them as well. If one used the pet search, they would see the account had been banned and could simply check daily to see if that name was avalible. That's what people who take graveyard names do from what I can tell. Leaves the pets a fair game.
I think that if a user has been banned, no they do not deserve the stuff on their account just given back, but if they're now following the rules on a different account, I see no reason why they shouldn't be able to work their butts off to try to get their old stuff back.
I don't, nor will I ever, support inactive users pets being released or banned, for reasons previously stated. I've been thinking about going on hiatus and I would be devastated to come back to find any of my pets missing.
EDIT: *looks up* Wow. That's probably the biggest post I've ever made on res that wasn't just listing stuff for sale.