Actual cheating online should get no mercy from the providers. In an ideal world I'd give one warning, then one second offense brick the machine, delete all associated accounts, and revoke all purchases. I wouldn't advise doing that retaliation in practice though because it's possible to detect a false positive, or to have someone hack another person's machine to destroy them. So, sadly while the hackers deserve total immediate destruction, they won't get it.
Using an exploit (no tools required, just exploiting a bug) in an online game is different of course. As annoying as that is, and while other players should feel free to block you for it, you're just exposing things the devs should fix.
Cheating in solo games is obviously not the same at all. I grew up in the days of Gameshark, when cheat codes were like ways of extending and modding a game for more fun.