[UPDATE: See here for more information that makes me much less troubled about the University's action.] Troubling, if this account is reasonably complete. It's hard to tell more without learning about the context, including whether the student had some misconduct in his background, or otherwise showed himself to be a serious threat. But this does seem to merit some more looking into, especially since we're not just talking about the university's investigating a student (which I think officials must have a lot of flexibility to do), or even temporarily suspending him, but expelling him altogether.
Thanks to Duc Vu for the pointer.
UPDATE: I should note that if the student was expelled because his possession of handguns in his car (with a concealed weapons permit) violated state law or some school policy (presumably because the car was parked on campus), that would make the matter less troublesome — I don't think such a ban would be wise, but a school might nonetheless legitimately enforce it. Nonetheless, expulsion would still strike me an excessive remedy; nor would protecting the university from the possibility that he would turn into a Virginia-Tech-style mass killer justify this: If he really does plan to commit mass murder, he could do that as an expelled student pretty much as easily as an enrolled student (since the school doubtless doesn't have guards at each possible entrance to keep him off campus).
FURTHER UPDATE: (1) School authorities report that "Though the guns found in the car might have violated school rules, it did not violate state law."
(2) "The fictional essay, as well as the guns found in the car, convinced Scott County Commonwealth's Attorney Marcus McClung to have a judge revoke Barber's concealed-weapons permit, which allows him to carry hidden guns through Virginia.... McClung ... successfully argued to a judge last week that Barber should not legally have the permit since he was 'involuntarily committed' [because of the school's investigation] ...." Query whether this shows that the school's investigation did uncover some evidence of mental illness, or whether it simply shows that the permit was automatically revoked simply because of the school-triggered commitment.
Thanks to Dave Wegener for the pointer.