There's a difference between being associated with somebody in a clan and somebody who just plays the game. There are a number of people in the game who I wouldn't want to be associated with for various reasons, but I don't go around perm-banning them. If I were their clan leader, though, I'd certainly kick them out.
I think you tend to define cheaters as people who have taken some kind of black and white, absolute, no-return path to pure evil and will never be good or contribute anything positive to the game ever again. I don't see them the same way. They're just players. Some are skilled. Some stink. Some have contributed a lot to the game and community. Others are jerks we'd be better off without. The only thing that really sets them apart from other players is that at one point they decided to, for whatever reason, fire up a program, edit files, or do some other activity that potentially gave them an advantage over other players. Sometimes the "cheating" is as simple as editing a jersey to add a clan tag, and it can go all the way up to deliberate attempts to defeat a more skilled clan in a match. Whatever the case and player, most of them are smart enough to say, "Hey, I shouldn't do that again." once they get banned the first time around.
After that point, in practice, they're the same as any other player. They have a different history, sure. And some will be more inclined to cheat again, while others will be less inclined to cheat than somebody who hadn't cheated before. So, really, I'm not releasing cheaters back into the game, but players that once tried cheating, and hopefully won't do it again. If they do, that's why I have the exponential ban system.
Now, here's the other issue. There's no magical "go away" button to get rid of a player. I believe it's easier to turn a persistent player from his cheating ways than it is to remove him from the game completely. Let's take a step into make believe land for a moment and pretend you got caught cheating but really enjoy the game and want to continue playing. What's going to motivate you to be a positive member of the community:
a) "Be good, wait 32 days, and you can play again."
b) "You're not allowed to play anymore. Ever again."