It seems to me that libertarianism in its purest form can't work until everyone acts ethically all the time. Once we get that little problem licked, then we can start to dismantle regulatory mechanisms.
Yeah, that problem has never occurred to libertarians. Uh-huh.
One can believe what you wrote if one has never even attempted to look at what libertarians have written on the issue.
Most of the libertarian writers I've looked at content themselves with a two-fold approach of lauding the importance of ethical behaviour, and placing a very high value on recognising and rewarding ethical behaviour, while punishing unethical behaviour with death exile, or something suitably permanent. In other words, they try and solve the problem by increasing the rewards and punishments. Which does lead me to wonder why they seem to believe that no society has ever tried to do this before.
I suspect one of the problems is that libertarians get caught in the usual right-wing trap of personal morality. Right wingers seem to find it unusually hard to break away from the idea that morality is a personal, individual responsibility that takes precedence over any form of practicality. Hence with the Greek debt crisis, right wing posters kept on banging on about how the money was borrowed, and therefore must be paid back, ignoring the fact that the money wasn't there, and trying to get it too quickly would hurt the entire system including the creditors. Left-wingers tend to think in terms of communities and systems, so look for the best solution to a problem with any regard to who owns it, hence they almost always end transferring money from those who have it to those who don't, ignoring morality, fairness, and any kind of 'ownership' of the problem.
Under this model, the issue for libertarian communities comes sharply into focus. Libertarians imagine a working community where people obey the rules because they are rules and as a result little or no enforcement is needed. Unethical behaviour is threatened severely, and the simple threat works without ever being enforced because people who break rules are cowards by definition - they're personally unethical - and thus easily cowed. The idea that someone might act unethically for good reason is alien to them.
Left wingers look at the same plan for a community and just see a system that vastly rewards corruption. Yes it would work if everyone follows the rules of society, but then what society wouldn't? They see a system with a feedback loop that rewards unethical behaviour, and so seek to change it.