Latency arbitrage is not cheating either, as it is done professionally by the big boys in higher end currency trading.
e-forex magazine had a special feature on latency that was published in October 2005.
Here is a quote:
the Currenex platform processes approximately five thousand spot orders per second
Here is an excerpt of the article: Case Study : Sean Gilman, CTO at Currenex, outlines how they are tackling the latency issue.
If it was 5000 orders per second back in 2005, I wonder how it is now in 2010. It's interesting to see the amount of attention and effort that was put in to ensure top performance, especially in order execution.
Compare this with the technology of FIGfx who complain about traders submitting too many orders per second.