Adam Turk, developer of the MMOG backend engine JEROME, has an interesting blog entry that basically argues that smart game world rule design can help defend against player cheating. The example he gives is instantaneous travel - if player stamina is decremented by a factor of distance travelled over time, then the further the cheater moves, the more damage he will take.
This is a thought-provoking idea, but it seems to me that cheaters, by nature, will find ways around rules like this. For instance, what if they only move ten feet, but that point ten feet away would normally require a 1000' journey to get to because there's a wall, chasm, or difficult encounter in between? Or move other players?
I'd still want server-level cheat defenses, but it's interesting to think about security design at both the game world logic level and the server level.