He's gaining unfair positions no matter how you look at it. 20 car wreck happens in front, everyone is slowing down trying to avoid it. That driver flips his switch and drives flat out through, then flips the switch back and has just passed the whole field as the caution has come out and has to worry nothing about damage or (if anyone cares) incident points. It's also free iRating (since others crashed and you did not), and free points if it is in a big championship (like that video was of DWC).
It's changing something outside the game, and physically for that matter. Could fall under cheating for sure. Not any less of a cheat, if anything it is more useful than a speedhack, as a speedhack is easily noticable.