This shouldn't be an issue on multiplayer servers, considering servers will (should?) control damage, exp, and drops; though speedhacks could be tricky, the server can still check movement, and warp offending users back.
You can prevent hacked characters by disallowing stat copying (still allowing players to copy the apparance), so people will have to start fresh on a server they join; or they could be set to the level of a friend or something like that (so they can play together). This should of course be a configuration option; so friends can connect with their own character and stats on their own server.
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