It's practical, VACnet has existed for over a decade. It might not be perfect, but it's a start and any company serious about anti-cheat could take that premise further.

The downside is that cheaters have to play at least a game before they are detected. Client side stuff is better for initial prevention, but even that's becoming trivial as most good cheats dont even run on the same computer as the game anymore, circumventing all AC software anyway. If your game costs money to play, that's already one of the biggest hurdles, so prevention isn't worth chasing at the expense of privacy and security of users.

Any downsides from server-side are nothing in comparison to the downsides of client side anti-cheat.