As far as wearing letters, I don't think an org can prosecute on that. I'm not a lawyer, but I'd think that would fall under freedom of speech. My college roommate/close friend was a DPhiE and I'd borrowed an event tee (with letters) before when I hadn't done laundry and was desperate. I def wasn't going to do anything disrespectful while wearing that shirt.
I'm really shocked you guys weren't given automatic alumna status. If there were a couple of bad apples in the chapter it's not fair to punish the rest.
Feel so bad for you.