I've been in a few servers where I've seen it happen. Unfortunately I've been in more than a few servers where I knew for a fact people were wallhacking too, where they didn't get banned. The reporting player function is this game is a bit awkward so makes it difficult to get them banned.
I'm seeing it happen more than often though now, servers detecting hackers. I tend to favorite those servers because at least you know the admin is doing something about it.