Yeah, it's most likely to prevent someone from using the family feature to get away with cheating.

As it stands now, if you get caught cheating you must create a new account and repurchase the game. So the main deterrent is the full cost of a game.

With the steam family function you could potentially create 5 new accounts per year, and simply remove them when they get caught cheating. The only deterrent would be the wait period.

So I agree with their decision. The downside is that you must trust someone before adding them to your family. If your cheating son gets you kicked off counterstrike, then just remove him from your family. They're never too old to drop off at the fire station.