Both my son and my daughter moved back in for a couple of years. DS dropped out of college and we talked him into coming back to DC and returning to college. DD (12 years younger) loved having him around as did we. He is now married with two kids, gainfully employed and living a half mile away. DD moved back in for a couple of years after college. We liked having her around and her initial jobs were marginal (pay wise) so she needed the assistance. She is now teaching in an ideal situation and living across town. Both DD, DS and the grand kids are here for dinner two or three times a week. For us that is the ideal way to get a regular dose of family without the responsibility of baby sitting or having them hovering at breakfast.
I read somewhere recently that these days 85% of kids return home after college for some period of time. That sounds high to me but from friends experience has some credibility. I don't think tough love is warranted unless the kids are sitting around doing nothing. Using a bargain priced home base to get a head start on life seems prudent to me. It also gave us the opportunity to instill a little extra LBYM example/propaganda while they were working and at a more receptive age to internalize it.