I would never host an internet game , on a lan yes, on the internet no.
If I suspected someone was cheating then I would leave the game as there is no point in playing with a cheater.
I would make sure first as there are some good players out there, but if you shoot them in the head a few times, and they are still alive, then that would be quite suspect lol.
There are other ways that are considered cheating and not game ettiquete such as camping and player spawn camping (cheating?). Spawn camping is due to poor level design which allows this to happen ( In half-life TF1 you spawned where you could not be killed in this way).
You get campers that camp by a powerful pickup or by the flag spawn to rack up the frags, I don't mind so much after the first time as you know where they will be, and the hunter will become the hunted lol.