I had a long conversation with Slant Six about who is host of the rooms.I will post there final answer because the conversation is long.I hope this helps put to rest how host work in the games.
haha, if the host appears to be cheating it migrates... yeah i belive that. if the game knows whos cheating, why are there cheaters online?
The short answer because criminals have more rights than victims. Slant 6 had a mechanism to weed out people with horrible/sketchy connections but the people with horrible/sketchy connections complained and got it removed. When he says "appears to be cheating", he means that their connection is sketchy not that they are running god mode.