A different kind of quarantine

Yesterday I read an interesting suggestion concerning online cheating, from GM Ruslan Ponomariov. Instead of trying to ban players who are using 'outside assistance', instead don't tell them they have been caught, and instead pair them against other players who have previously been flagged.
This way it becomes an engine v engine match, and rating points only circulate within that group.
While it is an inventive idea, it possibly falls down when players try and enter tournaments. If the tournament is large enough it may be possible to isolate such players, but a more practical solution is to generate some 'system error' that prevents them from entering.