If cheats have to be ML + hardware level and cost a few hundred dollars, that's pretty much mission accomplished for most companies.

Definitely already exists. I've seen external aimbots that monitor what's on screen and input specific keyboard/mouse commands.

Incredibly difficult to detect, you basically need to model the way users behave differently from bots... but at the high end of competitive play people tend to approach more bot-like behaviors.

I mean, this is already happening! Have a Google for "Hardware CS:GO aimbot" and there are some crazy things people are doing to cheat in video games. Stuff that attaches to the CPU, ones that attach to the mouse to fake input that way, it's really quite ingenious. The market for these devices is enormous.

I guess radar cheats where the ethernet cable to split to a second computer could also be considered a hardware cheat, since it's running between an airgap.

This is already a thing and somewhat-common, everything from PCIE devices to aimbotters purchasing EV codesigning certs in their own name.

From what I understand there are already cheats that work at the hardware level (read video output, modify mouse input) with all software running on another machine.

A writeup from an esports org on hardware cheating: https://blog.esea.net/esea-hardware-cheats/