As long as a coach stays outside the 1000, it's not cheating. However, there are ways it can be used to give that coach an advantage.
For example, I could have a team in Arizona and one in Tenn. I could scout players out West using my AZ team, and scout players in the south with my Tenn team. Scouting reports can be used by that coach, to help with understanding potential with longer distance recruits. If I'm in Tenn, and I'd like to look at potential for recruits in Arizona and Colorado, it would cost me a small fortune. But, if I use my Arizona ID, it costs me a fraction and now my Tenn team has knowledge of the potential of a recruit, that they previously would never have the funds to go obtain.
Also, you could even use one ID to knock off SIMs with one ID, get them green, and then pour money into the recruit with the other ID as a backup plan. I do this alot with recruits that I know another coach is not going to sign. If I can turn them yellow, then I know the recruit will come to me if the other coach doesn't sign them. This could really help a D1AA team, where a specific recruit may not be good for D1, but would be excellent for a D1AA team.
Obviously, the second scenario above would likely get called out quick, so I think it's tough for a coach to pull that one off. While cheating possibilities exist, I believe that 99.9% of coaches here are honest guys that just want to try things with one ID (new formation, etc.), and something else with another. Until a coach proves otherwise, I'll trust these coaches that do this and give them the benefit of the doubt.