I think cheaters should have their ratings cleared in order to repay the loss of legit user ratings.

I think it is more like they have a set rating of 1400 which is not showed to them in order to preserve moral, most people who start cp are not 1400+ rated so they would see a rating drop off get demoralized and leave. so they are not getting rating lost by other people rather they are getting 500+d1 and 350+d2 where d1 and d2 are the actual increase from 1400 so if someone get's +350 after the first contest it is actually — 150 from 1400 and the rating algorithm now views their rating as 1250 while they see the rating as 350 and so on it takes 6 contests to normalize the rating where rating after the 6th contest is usually their true rating.