By punishing Hester with the scarlet letter, the Puritan community is doing what, according to Nathaniel Hawthorne?would it be: (a): being...

As we look at The Scarlet Letter's
opening chapters, I think your analysis is correct.  A quick look at each
answer makes it clear.

a): being reasonable about their
justice  -   there is nothing reasonable about standing on a scaffold with a baby while
the townspeople stare and condemn and preach.

(b):
following the principles of religious forgiveness  -   not even close.  There is no
forgiveness in this town, except perhaps for the quiet-voiced young wife in the
crowd.

(c): proclaiming its own smug and judgmental
self-righteousness

(d): being merciful by allowing Hester
to stay in town  -    Th punishment for her sin/crime is death, so I guess this is
minimally true.  It still smacks of judgment, though.

So,
the answer must be C.  Note all the commentary and condemnation of the crowd,
particularly from the women.  (Perhaps they're a bit concerned that the unnamed father
of this young child might possibly be their husband?)  She is soon to be the subject
matter for the sermon (in the worst possible way, of course) and the scandalous talk of
the town.