Short Answer: The shift is not only justified, but I believe it is virtually demanded by the context.
From a grammatical standpoint either "sins" or "keeps on sinning" could work. (Technical mumbo jumbo: This is because the verb is in the Koine Greek "present tense" which is used for both ongoing action, as well as punctiliar/undefined action, in present time.)
The interpretation comes down to following the author's flow of thought, and perhaps, theology. Wallace goes with gnomic, seeing it as an eschatological reality. At the risk of playing the fool, I disagree with him, since John's entire letter is centered around real fruit in real time. I also think the immediate context demands a translation which signifies ongoing action (i.e. practicing X), if you read 3:4-10 together.
Evidence From Authorial Intent:
It is clear from reading the entire letter of 1 John that John's focus is on very practical matters in the present time -- not on theoretical, future, eschatological states that will someday be a reality. For example, consider the following quotes from his letter:
If we say that we have fellowship with Him and yet walk in the darkness, we lie and do not practice the truth; -1 John 1:6, NASB
My little children, I am writing these things to you so that you may not sin. And if anyone sins, we have an Advocate with the Father, Jesus Christ the righteous; -1 John 2:1
3 By this we know that we have come to know Him, if we keep His commandments. 4 The one who says, “I have come to know Him,” and does not keep His commandments, is a liar, and the truth is not in him; 5 but whoever keeps His word, in him the love of God has truly been perfected. By this we know that we are in Him: 6 the one who says he abides in Him ought himself to walk in the same manner as He walked. -1 John 2:3-6
9 The one who says he is in the Light and yet hates his brother is in the darkness until now. 10 The one who loves his brother abides in the Light and there is no cause for stumbling in him. -1 John 2:9-10
(I could go on, but that should suffice for now.) John wants his readers to walk uprightly and avoid those who do not walk uprightly. He is not writing a theoretical theological treatise, but a very plain, clear exhortation and warning concerning very practical matters (i.e. loving God's people.) Thus, "continuous action" seems to be in view in 1 John, not "gnomic" eschatological technicalities.
Evidence From Immediate Context
4 Everyone who practices sin also practices lawlessness; and sin is lawlessness. 5 You know that He appeared in order to take away sins; and in Him there is no sin. 6 No one who abides in Him sins; no one who sins has seen Him or knows Him. 7 Little children, make sure no one deceives you; the one who practices righteousness is righteous, just as He is righteous; the one who practices sin is of the devil; for the devil has sinned from the beginning. The Son of God appeared for this purpose, to destroy the works of the devil. 9 No one who is born of God practices sin, because His seed abides in him; and he cannot sin, because he is born of God. By this the children of God and the children of the devil are obvious: anyone who does not practice righteousness is not of God, nor the one who does not love his brother. -1 John 3:4-10, NASB
Notice that "By this the children of God and the children of the devil are obvious". What John is doing here is giving his readers a very simple test for discerning whether a person is from God or from Satan. If they love their brothers they are from God. If they practice sin they are from Satan. A "gnomic" rendition of the function of the present tense in 1 John 3:4 would make virtually no sense in context.
Answering Wallace's Objections (pp.524-525)
Wallace says "The very subtlety of this approach is against it." I'm not sure what he meant by that, as he gives no further elaboration.
Wallace cites the use of the present tense in 5:16 as an argument against the "customary" view in 3:4, but unless I'm missing something he should know better than to use that argument. Of course the present tense can function in other ways in other contexts! That is not an argument against a particular function in a particular verse several chapters prior though. Honestly I was surprised he would even use this argument.
Wallace's third and final argument is that gnomic presents usually occur with generic subjects. This is not an argument against the "customary" view though... it's simply a statistical data point that allows the "gnomic" view as a viable option grammatically... but we already know it's a viable option grammatically; that is not what is in question. What we are wondering is whether it is a gnomic present in this context, and his third argument doesn't answer this.
Grammar provides us with a range of possibilities, which authorial intent can then help us narrow down. Theology sometimes must play into interpretation as well. It seems to me that Wallace has recognized grammatical range (which is his area of specialty), but then uses his theology to select "gnomic" over "customary". However, both the author's purpose of the letter as a whole, as well as the author's flow of thought in the immediate context virtually demand the "customary" view.