My iPhone is protected by password, is it possible for the thief to restore factory setting? I quickly activated lost mode in find my iPhone. I worried that the thief managed to restore factory setting before I do that. The thing is before I put lost mode, I disable the 3G dataplan following a stupid advice from my families.

That means my iPhone will never know that it should turn on its kill switch because it will never connect to the internet. What about if the thief restore to factory setting before connecting to the internet?

find my iphone is ALWAYS ON. I never turned that off. I am concerned that the thief just turn of the iPhone, never access internet and then restore factory setting before I turn on lost mode.

My wish is for the phone to be returned and the thief to get the thief to jail. I am willing to pay the price of the iPhone for that to happen.
To restore a device using iTunes, iTunes itself requires an internet connection. Furthermore, the status of Find My iPhone is obtained from the device as well as Apple's servers—iTunes knows if the device you're attempting to restore has Find My iPhone enabled and will prevent the device from being restored. The only way to restore a device with Find My iPhone is to put it in Recovery/DFU mode, but then when the device is finished restoring, Activation Lock will be enabled when the device connects to Apple's servers which is required when setting up the phone.