Lock their lfs accounts to only uf1 and so they cant enter uf1 races so they have to race against faster cars. Also make a skin saying "cheater" all over it
strap them to a wall and get a professional tennis/baseball player to hit balls at them
But think out the box use a tank :P but dont play 5 a side football just run their toes over, then with each run slowly move up the their knees
then fingers up their arm to elbows
You know what . . . they probs ain't such a bad idea.
You have to upload your skin right . . so therefore the central (sic) server has a copy of that skin so everyone can see it. Sooooo, a cheater is found out and a replacement skin is shown. One that will have CHEATER!! emblazoned across it . . . Can't be so hard to do . . .
Plus, what happens in RL . . You get clamped. Cheaters get their cars clamped. So they can't exit and re-login and they can't drive. And a big yellow clamp is placed on their wheel so everyone can see. A cyber punishment in everyway.
Or beat them with a comically shaped turnip.
Actually all things considered I think the latter has more longevity . ..
Cheaters should be put into a cage with only IRC/AIM/MSN access and not let out until they solved faster111's GFX card problem by giving him advice. Maybe keep medics nearby in case of a nervous breakdown. Punishment incase of a failure is still open to debate.
E: Idea 1: incase of failure, they are sent to the LFS forums server room and installed as "live plugin", doomed to forever correct the spelling of beforementioned subject.