At which point is becomes a government, which probably is what the ancient Jews needed, but is long since outdated by now (A religious-based government, that is), as a government based in religion is bound to mark those that don't agree as criminals.

Government based on anything is bound to mark those who don’t agree as criminals; if it didn’t it would be failing in one of it’s major responsibilities. And that’s what we have here: a burglar who is engaging in activities society has marked as criminal. The question is how society can enforce it. If everyone agreed on the same moral virtues, than it wouldn’t be a problem. However, everyone doesn’t and I see no way to convince the outliers other than to point guns at them and lock them up.