Here's what should happen:
1) The homeowner should be reimbursed for his time that agents of state wasted and trauma that agents of state inflicted. A public apology should be made with the mayor on his knees while doing it.
2) The arresting officers should be dismissed from their jobs and brought up on federal charges of violating the homeowner's civil Rights.
3) The firefighters (if any) who suggested that the homeowner be arrested should be fired and charged with conspiracy to violate the subject's civil Rights. (This is a federal crime also).
4) All those involved in lesser aspects of the event who were "just doing their jobs" should be required to take a class on individual Rights and the role of the peace officer in a Free society. The course should be taught by someone like Walter Williams or Nat Hentoff. They should pay for the class out of their own pockets. Those that fail should be fired.