I like trolling the people I know use this by cloaking and decloaking over and over again to piss them off.
I've banned 4 people in my league that used this, or a variation of this script. All of which admitted to using it directly after being banned. It's 100% possible to detect but I will say it is definitely not the easiest thing in the world to sit and try and detect, but that can be said with all cheats when they're well disguised by the player using it.
Mostly I figure it out by playing against them but that's just mainly due to the sheer amount of spy I've played. This script becomes really bad at the lower levels where people just don't question it or know better, and without anyone reporting those incidents, there are many many people who are probably using this in RGL without being caught. All of this can be said with other cheats though, it's not a unique situation.
@Pete, I'm not happy you posted publicly how to do this because it is inherently giving me more work to do in order to keep my league cheat free, but this is offset by the fact that now there are many capable people who are going to try and find ways to detect/block/flag this cheat when used in a match server, because they all share the desire to enjoy tf2 at it's best.