Banning paying players is the worst. I wish there was a nice happy solution to the problem of cheaters, but I don't know of one.
I think I'm more sympathetic to people trying out hacks out of curiosity, especially if they're not trying to cheat their way to tournament money or something like that; but I can see that it causes an overall problem if it becomes widespread.
One question that sometimes comes up is whether it makes sense for game companies to be zero-tolerance about cheating tools, analogously to how possessing burglary tools is illegal in some jurisdictions. What if you really do use them in a "legit" fashion, such as only on servers where the server admin allows them? If it's explicitly a have-fun-with-hacks-here-all-you-want playground, or a server set up to allow bots to play against each other as part of AI research, then it's not really "cheating", is it? Yet people have gotten centrally banned for that sort of thing due to cheat-detection code inserted into the server by the game's creator.
I've been reading this book lately, so the idea of how cheating is defined, and who gets to define it (e.g. game creator vs. server owner vs. community norms) is on my mind a bit: http://www.amazon.com/gp/product/0262513285/ref=as_li_ss_tl?...
That would depend on the type of game. The above would be OK in a game like CounterStrike where nothing persists between servers. The above should be bannable in games like TF2 where using cheats in an "all cheats" sever could allow a person to get items or achievements that could then be used in games eithout cheats.
Context is key. My biggest surprise is why games have never tried an "official" cheat mode that could be used exactly like you describe.
In DOTA2 and Starcraft 2 cheaters (and in DOTA, griefers/feeders[1]) are put into their own secret matchmaking queue to be matched up only with other cheaters.
I thought that was a rather clever solution.
[1] someone who, possibly out of frustration, intentionally dies to the enemy team, giving them gold
Now imagine you have a false positive and start matching someone who paid for their online gaming with cheaters all the time.
Sometimes it's hard to tell - I've had bad days where I'm just dying all the time because I just levelled up and am playing against harder people AND having a bad day, so I keep dying - but usually, it's really, really blatant.
http://wiki.secondlife.com/wiki/The_Corn_Field I recall bad avatars back in Second Life were once sent to a virtual corn field for a few weeks to reflect on their actions!
as long as they are clearly notified "you have been banned for 3 months, cheat again it will be 9" it'd do the same job surely?
[1] Judge says: "If you commit another crime or are found in violation of your parole you will go to prison for X months longer".
It's a simple analogy that ignores a lot of extrinsic issues, but punishment isn't always a sufficient deterrent.
The problem is that cheating is more fun when you're the only in the server, since (from my experience) cheaters are looking for attention - either by annoying others or by getting top score.
So a "cheating allowed zone" is by definition a boring place for cheaters.