Something I observed
I noticed that when playing with the camera hacked client that the XMAS stuff was still in it (the xmas trees, snow etc). At first I figured it was nothing as it was an older version of the client that was modded. Then I noticed that things like snowmen would stop me moving, this made me think that because I couldnt walk into it, that it was client side where I was allowed to move.
In short, I think if someone has the ability to make a client hack that allows walking through walls or secenery, you could do things like attack a creature with everything you have, retreat behind a wall and regain HP and MP etc, step back out of the wall and countinue. There are many possiblities that could come from this.
I dont however have the knowledge to do such a thing but thought I would put the idea out there for anyone that does.