I've recently finished re-reading Bede, and am scratching my head to understand this.
Pope Gregory seems to have made it quite clear to Augustine of Canterbury that theft from the church should be repaid with no additional interest or remuneration. Ethelbert seems to have been legitimately pious and devout, and eager to take Augustine's advice.
Why then did the king promulgate such stiff financial penalties for church theft? Is this merely the over-zealousness of a convert, or was there some other consideration at work?
It makes me wonder why Augustine asked Gregory for direction on this matter in the first place if Ethelbert was going to disregard the advice.
If someone could steer me in the direction of additional sources or commentaries on this matter, I would be very much obliged.
Gregory's reply is completely out of touch with Germanic legal practices. He argues out of church ideals, from the idea that the punished should be 'corrected'. Germanic law, on the other hand, dealt with compensations and lawful punishments. Ethelberts law is still exceptionally harsh for church theft. But things start to make a little more sense when you take a step back, and not look at what is written, but in what context. Augustine is asking basically two types of questions: first, practical matters (including legal affairs) that simply confuse him and that he wants to have an opinion on, but secondly, the relation between him and fellow important people (particularly other churchpeople). Seen within this context, what Augustine really asks (and what Gregory answers) is what the principle of judgement should be: Gregory answers that it is the interest of the perpetrator, not the church, that should come first. This suggests that by being a bishop, Augustine is now part of a church hierarchy, and no longer functions as an aristocrat passing judgement from an aristocratic perspective.
This aristocratic judgement system is reflected in Ethelbert's law. Besides the first page on clergy, all the other payments are quite realistic and probably reflect earlier established practices in the law-courts. The numbers on the first page are clearly symbolic; as measures of value they are completely arbitrary. So what do they actually tell us? They should be seen as a statement of hierarchy. It basically establishes that there is a hierarchy within the church that is separate (or, if you will, on a completely different level) from the established hierarchies in society. This has nothing to do with actually stealing from church anymore. Rather, it establishes that the churchperson (scales 11x-3x) is a separate entity from the noble he might have been before, and that church properties are distinct from the personal properties of the priest.
Note, by the way, that breach of the church-peace (ciricfrith) that you refer to in the title only has a twofold compensation, quite different from what Augustine asks for, which is the property of god and church (godes feoh et ciricean, twelve-fold).