I think it was Nintendo that introduced the gaming world to acceptable cheats. A cheat code could be entered in Contra for a hundred extra character lives. Other games allowed cheats to be entered for invincibility, special characters, and dozens of other perks. The goal was to increase a game's replay value by enabling players to approach it in multiple ways.
Games like Goldeneye on the N64 changed the rules a bit. The developers probably didn't want players to cheat their first time through the game and undercut the game's difficulty, so they came up with a system of gameplay achievements by which players had to earn their cheats. Some were harder to acquire than others. The cheats were also more depthful than those in most games. Playing through the game with dual SMGs or a grenade launcher made every level feel different, but players were capable of switching cheats (from one weapon to another) or ignoring them (going back to normal weapons for that level) in the middle of gameplay. It was a very dynamic system.
Yesterday, I watched a video showing a few skull (cheat trigger) locations in Halo 3 and their effects. The player is encouraged to explore the environments; sometimes in remarkable ways, such as using a mobile gravity lift to spring to out-of-reach places. The cheats can have great replay value (like the ability to turn off one's HUD, which even includes the player's gun graphic) and unexpected results (like hearing a fellow soldier yell, "For Sparta!").
CHEATS FOR MMOS?
Every cheat I can remember for any game is for solo play only. Afterall, we usually don't want one player to have a great edge over another. And perhaps MMOs, in particular, generally require a more level playing field, because the cheater is a component of the non-cheater's virtual world. But could there be room for something similar in MMOs?
Permanent effects? No, I don't see much viability for those. Goldeneye's unlimited ammo cheat and Contra's extra lives are example of permanent effects, because they can last through the whole game.
But temporary effects? Sure! Reward players in ways that only temporarily offer some fresh gameplay experience.
Just as real explorers get a rush of energy from making a discovery, players could get temporary bonuses from discovering particular objects, locations, and even information (such as in a conversation with an NPC).
Such buffs are particularly enjoyable when they are unique and clearly explained.
Unique how? If I'm rewarded for a discovery with a stat bonus I could produce myself or solicit from another player (like a simple shielding spell), then I probably won't feel any pressing need to make use of my reward before it fades. Oblivion offers combo buffs (like health + endurance) for Ayleid well discoveries, but that's not much better. The bonus shouldn't last too much longer than normal buffs, or else a player might run from one discovery to the next to build up enough power to, for example, make a boss fight easy. It's better to make the reward unique by type than by duration. Do something truly unlike the player has ever seen before.
Clarity means not just placing a spell icon in the corner and making your player go to his spell journal to figure out what the spell effect does, ala Oblivion. The effect's nature should be briefly and obviously explained without the player needing to flip through his interface.
Of course, rewards don't have to take the form of stat bonuses or powers. Discoveries can trigger ghost NPCs to appear and speak with the player, trigger epic and/or unexpected battles, trigger environmental events (ex: the player moves something out of curiosity and a small hut collapses, to the ire of the nearby homeowner), or any number of other things. But I suppose buffs are more in line with the topic of game "cheats". Still, if one of those NPC conversations or battles resulted in a faction advantage or special gear augmentation, it might count.
Defeat an encounter under special circumstances (ex: in a remarkably short amount of time, or disadvantaged in some way) and you'll receive a temporary reward. Or repeat an act for Nth time, like slaying your hundreth orc (not all in the same place, hopefully).
The player might even be rewarded for community participation or services. Give an item to a lower-level player for the Nth time and receive a reward. Or start/join a group for the Nth time. Or spend so much time/money on community items, like fireworks.
Promoting charity among players is something I'd really like to see rewarded more regularly in online games. Through smart rewards, you can get at least a small number of players motivated toward selfless actions during gameplay. And if you can motivate a few, those few will motivate many more through example.
Honestly, I don't think I covered this that well, but you probably get the general idea.