Cheater is the broad term. Dupers, scripters, and so on are all forms of cheaters.
As for my use of scripters in the first three paragraphs, people use scripts to farm for gold, items, and get BODs. Many cheaters dupe them as well. Scripts aren't just limited to gathering resources. Scripters could make a script to kill swoops for gold, including running to the bank to drop it off and going back to farming swoops.
As for camping monsters, I'm more familiar with the EQ version of it, where people script an entire group of six and camp the individual monster that drops an item. I can still see someone doing it in UO as well, killing everything in Destard farming hides, for example. A good script often reads things that never shows up on the screen, like the maphack in Diablo II showed where unique monsters were in parts of the map you've never been to. The script could then run the speedhacked character to each dragon as it spawned. Or it could just be a group holding the entire dungeon. Just examples that are applicable to UO.
If cheating was allowed "because the cheaters aren't doing anything to you, just killing monsters," this sort of thing would happen. And don't you think a cheater will have the best possible character they can to do these things with? Which means they're better equipped than many normal players, so can often kill the dragons before you can. You'd then be reduced to either farming mongbats, or buying the gold they've been farming, in order to buy the items they've been farming.
Even if a cheater isn't directly affecting you, they will indirectly do so. What happens to the price of player sold items when the cheaters farm gold 24/7, and spend it all?