As Tony said why would you plan to come to a foreign country and start doing illegal things, would you do that in your own country? People will say lots of foreigners do this in Thailand, but that doesn't make it legal and people do get deported for doing this. I would be especially nervous doing it now at a time when the banks are being scrutinised. The rules are there for a good reason to ensure people have enough money in an emergency situation. If you don't want to deposit 800,000 why not get the OA visa instead and buy the mandatory insurance.
I am not an expert, but I think their visa would have expired, so they would have to start the whole process again and probably have to leave Thailand to get a new visa or visa exempt stamp. I think it's true they would not receive a fine, but everything else makes it a very bad idea.
non O is not a tourist visa. It is an immigrant visa. The 'O' stands for 'other', so it used for a few purposes, but it covers things like retirement and marriage. It is the best choice for you. Most people retiring to Thailand use this visa type.