Summary: the problem with Pascal's Mugging arguments is that, intuitively, some probabilities are just too small to care about. There might be a principled reason for ignoring some probabilities, namely that they violate an implicit assumption behind expected utility theory. This suggests a possible approach for formally defining a "probability small enough to ignore", though there's still a bit of arbitrariness in it.
Consistent risk preferences can be encapsulated in the shape of the utility function--preferring a certain $40 to a half chance of $100 and half chance of nothing, for example, is accomplished by a broad class of utility functions. Preferences on probabilities--treating 95% as different than midway between 90% and 100%--cannot be expressed in VNM utility, but that seems like a feature, not a bug.
In principle, utility non-linear in money produces various amounts of risk aversion or risk seeking. However, this fundamental paper proves that observed levels of risk aversion cannot be thus explained. The results have been generalised here to a class of preference theories broader than expected utility.