Let's be clear: TP'ing a house is trespassing and (minor) vandalism. I don't condone it.
BUT . . . a sword, even a fencing foil, is a weapon. Responsible people don't brandish weapons they don't mean to use. If you're not prepared to shoot, you don't draw your gun. If you're not prepared to stab or slash, you don't draw a knife. There is no such thing as "scaring" people with a weapon.
I'm not sure this guy ought to be fired -- which would seem a pretty stiff penalty. But he certainly needs to be told where the lines are. Defending your house from TP'ing does not justify assault with a weapon (even your fists). Now, turning the sprinklers on or using a garden hose, I'm okay with.