tsarSomeone who goes through the effort to get cheats that work on VAC protected servers - i.e. ones that cost money - won't be stopped by having to buy an account over level 5. There's a surprisingly big black market for stolen, inactive, leveled steam accounts or someone can just level it up themselves. It's not that hard to get 500xp on steam. There really isn't a downside.
EDIT: also if you truly believe that the level cap reduces cheaters, why allow low level people on the servers that allow sniper aka the most unfun server to play against a cheater on.
I can only speak for myself, but the cheater listed in this thread is the only one I have encountered (at least that I recognized) since the level cap was added. So yes, I believe it reduces cheaters.
I agree that getting a level 5 account is not a huge effort by itself, but I do think that it's a significant step up in effort from simply creating a new account every time you get banned.
Again, we need DATA on how effective the level ban has been at reducing cheaters (+ its effect on overall playerbase) to argue this solidly, or else we will just theorycraft around each other's arguments into eternity.
I agree that removing the level cap for the sniper servers would be a bad move, but I still think that it warrants testing, since I too would enjoy DM servers that are alive for more of the day.