I mean, this is already happening! Have a Google for "Hardware CS:GO aimbot" and there are some crazy things people are doing to cheat in video games. Stuff that attaches to the CPU, ones that attach to the mouse to fake input that way, it's really quite ingenious. The market for these devices is enormous.

I guess radar cheats where the ethernet cable to split to a second computer could also be considered a hardware cheat, since it's running between an airgap.

Definitely already exists. I've seen external aimbots that monitor what's on screen and input specific keyboard/mouse commands.

Incredibly difficult to detect, you basically need to model the way users behave differently from bots... but at the high end of competitive play people tend to approach more bot-like behaviors.

I seem to remember some detection algorithms that worked off "reacting faster than humanly possible" - but of course the bot writers tune for that.

This is already a thing and somewhat-common, everything from PCIE devices to aimbotters purchasing EV codesigning certs in their own name.

From what I understand there are already cheats that work at the hardware level (read video output, modify mouse input) with all software running on another machine.

A writeup from an esports org on hardware cheating: https://blog.esea.net/esea-hardware-cheats/

If cheats have to be ML + hardware level and cost a few hundred dollars, that's pretty much mission accomplished for most companies.

100% this. Coming from someone who made one myself :p if everyone had to do it to cheat, cheating would be OVER at a casual level, and a minor issue at semipros/pros (even irl tourneys can be hacked! see forsaken).

But why would it cost hundreds or dollars? I can see why a DIY solution might, but if there's demand for it, surely it can be packaged as a plug-and-play device, and manufactured at scale for a lot less?

Camera + beefy computer + input device, maybe an external motor based thing if controllers are crypto locked by manufacturers in the console case.

Even if you made a specialized item it would still cost a lot mostly due to the ML requirements. Maybe smartphone + a specialized input device would reduce the 'cost', but you still need to buy a several hundred dollar cell phone.

I can't see that taking off at scale, but certainly in the semipro level it would be used.

Besides, I know like 90% of cheaters are 14 year old kids who used the first google result because it's so easy to. Any resistance and that'll stop a majority