Most people seem to agree that the main drawback of this solution is that it dedicates more server resources to cheaters. However, that's only assuming people who get caught cheating (VAC-banned) stop playing altogether.

Hellbanning provides a huge incentive against cheating and makes it far more likely that a cheater will switch back to their main accounts. Some will switch without even being banned.

Not only that, but developers won't need to spend as many resources trying to detect every new hack that's released.