There is generally no overt threat, but there is considerable implied threat. The implied consequences of not believing it, is that you will put yourself outside the holy circle of Maharaji's influence, and will thus be at the mercy of your mind, where Maharaji's grace cannot reach you and save you.

Once initiated, are devotees compelled to practice Knowledge out of fear?

The fear again is that if you do not practice Knowledge you will put yourself beyond the reach of Maharaji's grace or influence to save you. Maharaji often likened this to becoming a pile of rotten vegetables, in the sense that without his life-giving power what is inside your mind will just rot.

In the eyes of Maharaji, what is the penalty for individuals who accept initiation but then cast it aside?

Who can really say what is in the eyes or mind of Maharaji. He used to say that the penalty of those who do not practice Knowledge is that they do not practice Knowledge, meaning that they miss out on the incredible opportunity he is offering. I once asked him what was the punishment of missing satsang, and he said: "Missing satsang" (satsang was the daily evening ritual where you heard others talking about Maharaji and Knowledge; later only Maharaji himself was able to give satsang).

What harm do strict devotees think Maharaji will do to the less-strict?

The harm is what you do to yourself by not placing yourself at the heart of Maharaji's world. The so-called strict devotee will thus think that they are better off than what you call the less strict, with all the smugness that someone who considers themselves at the center of a scene thinks of those on the periphery.

Is Maharaji's power based in the paradigm of Hindu religion?

Yes - there is one absolute God, and you cannot find him on your own, but need the help of a guru (or a particular temple, or Hindu priesthood, depending upon your flavor of Hinduism). In place of 'God' Maharaji usually says 'heart' but the baggage is the same - a transcendental 'other' that you need to get to, but cannot without his help.

Or is it based in cult-worship ideology?

What is the difference?

Do lurking premies feel Maharaji will punish them?

They punish themselves so much that there is no need for Maharaji to step in and add to the punishment in any way. They don't feel Maharaji will punish them, but that they will be punishing themselves, and as a consequence they are punishing themselves.