Um, I'm not saying that everything the ancient Egyptians did was a good idea, but I reckon if it's okay to pierce a newborn baby's ears, then why not a cat's?
I definitely remember seeing statuary from Egypt that included cats with gold earrings. I know that cats' surface skin heals faster than subdermal tissue, and they can be prone to infection, but gosh, I don't know if I agree that piercing cats should be a punishable offense. That said, I think it's sheer lunacy to pierce the ears of an infant. I can't believe a cat'll sit still for it, but if the cats are happy, then what's the harm?
Here's a walk down memory lane-- remember Bonsai Kittens? I remember the ghastly buzz of Very Upset students at my university at that time... *chuckle*