That's really weird and it's definitely cheating. What's the point of cheating? It's not like a tournament where you win prizes, it's just competition.
I haven't played Mario Kart since my earlier post in this thread, so I haven't seen such a situation.
On a sidenote, do people cheat at Call of Duty World At War? I was online for a little while, not enough to learn it, but I got my ass kicked within 30 seconds of starting a game. Is it a poor matching system?