Alex, great post. I have some stuff to add, but here I sit hesitating what to say because I think that your post covered the basics of the cheating.
Kevin keeps telling us to cheat whenever we can. I think that this is the first level, where you become aware that there are certain rules and conventions, which may be explicit or implicit and break them. Even if cheating is not much or, as he does, you take advantage of your relationship with your partner, it is still training the mind to see things outside the box.
Now, I think that you hit an important point, that you have to know which rules to break. You can cheat and piss your partner off or you can have a goal and cheat to achieve it. The hard part is to be aware of the rules of the game and set your own goals: your partner may not even be aware of what your goal is. Once you have that, you can cheat to achieve them. You define what winning is - obviously this can lead to fooling oneself, saying that "one won" according to some twisted rule when in fact it is not true.
The "Governor drill" made me think too: Rory is right that none of us reacted in a way true to self-defense because we did not even think about it - in our minds we tried to simulate the situation and stick to the rules and limitations. I think that all of us understand initially that in martial arts, just like in physics, we set some limits to our model of violence, either for the sake of safety or to learn a certain skill in isolation (like proprioception in Chi Sao). The problem is that we bury this understanding deeper into our subconscious and we comply without thinking to the suggestions of our teachers (who have their reasons to teach the way they do). But here we lose a bit the control of our own training. I think that this is the case of most people who are not used to real violence. There are a few who either are experienced or did not forget their initial goal and they are able to see their own training for what really is: with its strengths and limits and then adapt it to their own needs. But I believe that most of us take longer to arrive at this understanding. Luckily there are a few people who can help open our eyes.
I diverge. To get back to cheating, I find Rory's thoughts about the implicit rules in an altercation to be really mind opening. This helps a lot to cheat properly: if you are aware of the self-imposed rules, you can truly refuse to play the other's game.
PS:
I have a feeling that NLP really helps to understand these "unspoken rules" and exploit them, in general. I am sure that we'll see more specific martial applications of this mental training because quite a few teachers are into it. This is probably nothing new, it may be what certain people are referring to secrets of their arts. This is certainly something that you can get a glimpse of in the Book of 5 Rings. BTW, Mauricio told me last time that I saw him to use martial arts for getting rid of the ego. While it wasn't the subject of our discussion at the time, it certainly is a way to understand the human personality. As we all know, knowledge is power.