If the code used to cheat runs outside of the machine the game is running on - as in your example - kernel level anti-cheat won't even do anything. What's next then? Allowing the game (we are talking about games, I want to make that very clear) to whitelist/blacklist attached peripherals? "Ah, sorry, you can only play this game with Razer or Corsair mice, because your noname mouse might be injecting inputs from cheat software."

Client-side anti-cheat is like validating payloads on the client side in web apps. It won't stop people who really want to break your game. Stop running shitty software on my computer. Anti-cheat needs to be server side, with (probably "AI" based) pattern recognition. If a cheater is found with some degree of certainty, let a human review the footage. Yes, these human employees cost money, but this is just the cost of running a (competitive) multiplayer game.

Instead, game developers/publishers add a crappy anti-cheat software. It's cheaper, but it's also worse in terms of actually stopping cheating and in terms of security for the computer running the game.