Until you use the free cpu to do image analysis for some cheap hacks like aiming. This might be interesting (I doubt people will do it though).

That would be possible, but other classes of cheating wouldn't be, like maphacks.

It stops the customer from cheating (or, you know, modding, tweaking, sharing, hosting dedicated servers (?), etc.), but the people who cheat in multiplayer games are unlikely to be the same ones who are willing to pay a monthly fee for the privilege of paying full price for renting new titles. Until there are Onlive only servers, or Onlive only games, this won't really stop cheating.

I don't see the connection between cheaters and non-payers.

I've seen cheaters on an xbox live game that costs the monthly live fee + a $70 game + a $300 system.

These kids mostly just want to troll.

If they really want to troll, they'll choose "can troll" system vs "can't troll" one.