We're getting a little off topic,but I'll answer anyway
I'm not thinking about cheating,because I dont even have a game yet. After I have a game,I'll start thinking about preventing cheats I tought about moving the clients localy,but this will require (like in World of Warcraft) using only local collision (players are passable,houses arent). I decided to go with server movement. I have an idea how to get around the 'build-in' lag of the periodic updates. I'm not talking about latency,lets imagine its low To get around the build-in lag I'm going to try to send a 'forced' update,wich will be sent to all nearby clients when that certain client starts moving. The other clients will move the entity localy until a 'normal' update comes. From that point on,the entity will move only from the server updates. I tryed something like it,and it worked great,the clients moved the entity right after the other client sent input,but failed after that because I have to organise my script better (it send almost 10 forced updates,until the normal update arrived)
I'm not thinking about normal latency because in a RPG its not required everything to be precise , you might get the anim flag a second later noone will notice.And , after all , I havent seen modems recently everyone I know has better connections.