Look all the good hacks, like aimbots and wallhacks are done in DX or OGL they do not use the game's coding. So cheating and hacking is a non-issue, any game code dependant hack is easily thwarted with just minor updates.
The absolute worst thing will be that smaller companys who cannot affored the 500,000 liscenese fee to use Source will be able to take advantage of some of its features. I'm sure Source's source will end up an unofficial guide at how to program video game engines when all this is said and done. There are only three big names in the engine market, Valve, Epic, and John Carmack. We know Jhonny isn't going to need to look over the HL2 code since he's got very little to learn from it. So that leaves Epic, but I seriously doubt they want to touch this with a 10 foot pole. I'm sure they will have some "innovations" that will just be coincedentaly close in time to this leak.
That leaves all the other smaller companys out there who liscense engines, or the even smaler companys that have to craft thier own. I predict those smaller companys might be willing to risk getting the HL2 so they can barow ideas, while the companys that can affored to pay out for liscense will avoid it like the plague.
So, in english, Valve will have more competition but just due to the nature of the beast its unlikely to be devastating to them.
The game will still be out in november/december.
The game will have online cheats regardless.
The game will be bought by everyone and jesus too.
The smaller game companys will benifit from the code.
Epic might be willing to risk a bit to learn from it.
No game will be sold using the source code in full or even verbatim.
So stop sensationalizing this whole fucking thing and realize that while Valve will lose some money they are no where near a sinking ship. Counter Strike 2.0 alone will recoup thier losses, not to mention all you analy die hard fans.
"I'm too much of a narcisist to really hate stupid people."