In Guild Wars 2 there was a cheater in PVP caught on video going around dealing insane amounts of damage and respawning instantly if someone managed to kill him.
The developers took control of his character while he was playing, stripped him to his underwear, waved goodbye, and then jumped off of a cliff. Then they deleted his characters and permanently banned all of his known accounts.
http://m.youtube.com/watch?v=bqfUi9DzBuo
This is how cheaters should be handled.
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This is torture for a hobby gamer, but good to see that cheaters get what they deserve. I just don't know why anyone would ruin other peoples experience.