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Yeah, it's most likely to prevent someone from using the family feature to get away with cheating.
As it stands now, if you get caught cheating you must create a new account and repurchase the game. So the main deterrent is the full cost of a game.
With the steam family function you could potentially create 5 new accounts per year, and simply remove them when they get caught cheating. The only deterrent would be the wait period.
So I agree with their decision. The downside is that you must trust someone before adding them to your family. If your cheating son gets you kicked off counterstrike, then just remove him from your family. They're never too old to drop off at the fire station.
This is indeed the appropriate reaction to being banned on counter strike. Joke aside you could just lock the entire functionality of adding an account to your family if someone got caught cheating though.
I'm not sure that would be the best solution. A cheater could still get caught cheating 6 times before requiring a repurchase, and it's still a pretty harsh penalty for someone who didn't cheat. You keep your game, but you can no longer share your library if your family situation changes.
'Sorry, son, you can't play my games on your computer because daddy made a bad decision when he was 21.'
The ultimate solution is probably an online identity when playing any game. Imagine if cheating got you banned from all online games for 5 years.