You reap what you sow. KP's behaved like a tool, and now he'll suffer the consequences. It's struck me that he's tried to get the ECB over a barrel and pander to his wishes - for example, I find it hard to believe it's a coincidence that after having played his best test match in recent memory, he then releases a statement which implies he might be jacking it in. It's too for him that by dropping him they've basically called his bluff and told him to get ****ed.
It's a shame, because I honestly believe that he does want to play for England, and has a passion for doing so. Unfortunately, his other goals have come in the way of doing this, and by attempting to be clever and manipulate the situation into him getting what he wants he's actually shot himself in the foot. As has been suggested, his position has near enough become untenable, and you can't have individual players attempting to run the show - and act as a divisive presence on the team as a result - so sadly, I'm not sure what else the ECB could have done.