It is definitely not cheating. It just makes things more fair. Imagine, people with good connection like ADSL have some advanteges. They can roast faster, capture flags faster, get more ammo and stuff, etc. So why shouldn't people with slow connections have any advantages as well? If you are on a fast connection and get roasted out of nowhere it's your own fault for using the fast connection!
Here's how I fight these people. Usually if the server is laggy I always get hit some seconds after I see/don't see myself being hit and no matter where I am (like behind a wall) and where I go. This is one disadvantage for me but in such servers there is also one advantage for me. Sometimes when server lags I can see people standing still or floating in air just like if they were frozen. They're not moving! So what do I do before they disappear? Ehehehe! I start buttstomping them continuously. After buttstomping them a couple of times they disappear or become invulnerable and I can see the roast text appear some seconds after that. I call this the Lag kill.

It is not cheating. It is an advantage of people with slow connections. Just like all the advantages people with fast connections have. So nya! Deal with it.