"You sure have nerve the size of TV cables to get all lovey-dovey in front of me." - My catchphrase when I see couple in public from now on.
But he was trying to grant the wish to make Homura's big at the end....and Madoka was misunderstanding to begin with...
Well, that was Kyuubey's way of delivering punishment to couple who flirt around in public. Indeed t's disproportionate but still, you shouldn't flirt around in public(and especially in front of loser like me).
Madoka's sin was failing to understand the most basic(and important) rule of universe despite being "Goddess", that is: "Nobody likes when magical girls transform into adults!" - Harii Noriko, Majyo to houki to kurobuchi megane chapter 8.
Public display of affection does not require punishment as harsh as alternating the body of participants. He was doing it out of spite that the girls completely forgot about him and focus on each other -> abuse of power. He was the one making them miserable in the first place, he has no right to talk. After declaring he himself has something he must protect at all cost despite the quota, he went ahead and did the exactly the opposite thing he just said. His speech right before getting kicked is just an excuse.
The contract wasn't formed, Madoka wasn't a goddess yet. In the context, Madoka was trying to save Homura, she made the wish because of a misunderstanding. Homura's reply indicated stress and low self-esteem and the only one can fix the situation right there was Madoka. The wish was meant to change Homura's physical appearance, not all the magical girls, how is that considered a sin if it is a misunderstanding, concerning only Homura? In addition, she stopped pursuing that wish once she knew the real reason Homura worried and she prevented that very violation of magical girls' image from being carried out. Also, I have a feeling the artist drew this based on the BD's 4koma.