Well, maybe my reading could have been colored by that that GM wanted character generation done completely backwards. The stuff like stats, skills and gear on a character should be done and finalized before any background or anything is done. Background and "fluffy" stuff can wait until everything is done, and can develop (and be revealed) as play progresses.
About 3/4 of the time, I develop the personality and background
before I get to the crunchy bits. You, on the other hand, appear to work the way one of my old friends did - couldn't develop background or personality to save his life, developed it all during game play, including if a bad guy came after him, he'd off-the-cuff give a reason why that meshed perfectly with everything else in his developing background.
That said - we'll just stuff a big 'IMO' into your statement and leave it at that.
In regards to the original concept, however, I would
not take away any of their stuff. Deactivate the obvious ware, sure. Magemasks and technomancer versions, sure. But once they bust out, you jump a week, two weeks - and what they bought in character generation, what ELSE they 'had to spend', is what they could scrounge up. Or, if they're like me and others like me, it's the result of having several packages (cycle, pistols, ammo, armored clothing, basic commlink, some spare nuyen) stashed here and there throughout the sprawl. Or perhaps in the matter of the Face, simply switching IDs and going to the place(s) associated with that ID. For the high-explosives troll, maybe certain people owe him big, and they're paying him back by bringing his gear back up to snuff. Or the mage had tucked away in an old doss a magical trinket that he hasn't used for years.
Whatever it may be, to take away anything but a key item - one that a) the character would move heaven and earth to get back, and b) that the player agrees would be interesting and make for a good run to do a) in regards to - is sketchy. To do it to 'all their goods' is going to screw over either your mundanes (as they run into limits on what they can buy), or the techno/mystics (as the mundanes spend whole handfuls of BP on skills, since you've essentially stated that gear is all gonna have to be gotten in-game). So ... walk carefully.