He wrote it's useful for singleplay games that have an intro. If you use it in multiplayer games you certainly will simply drop out of the game as you will loose the connection or what you described depending on the server implementation.
Although they did, there were some item duplication bugs. And even that was irrelevant, since there were quickly popping up small armies of item / gold farmers; every once in a while they'd get banned, but by then they would've earned enough money to buy another fifty copies of the game and continue.