There is no cheating in a single player game. Can't understand why they didn't split it:
Ladder: Current system, always online, server side, no cheating
Single Player : offline, characters can't go online, do what you want including pausing.
Surely that is the blatantly obvious non **** people off move?
They didn't split it because everything is handled by Blizzards server, mobs, NPCs etc. This is for security reasons and has caused problems for those trying to crack/hack the game. The only way around it is to create a sandbox (virtual world created by a user) to host everything.. it won't happen for a long time and even then it won't be through battle.net so dupes/hacks etc shouldn't happen.
The ladder and single player bits you mention are what happend in Diablo II.
This would be the best compromise HOWEVER if Sin_Chase was a Blizzard Dev:
Online Chars Online ONLY
Single Player Chars are Single Player Only
Online Chars can be copied down to a single player file (ONE WAY ONLY)
The latter could be done ad-hoc/on request or one can maintain a local mirror copy of an online char that gets updated when online. If you did any progress with it however you would not be able to copy that back online.
The only reason I can see them forcing online only is not having to release 'Character Construction' to a local file. This makes it significantly harder to train a character I imagine, how can you train something when you have 0 data to work from? No save game/character raw data is ever exposed to the local system.
Online only is for the reason I talked about above, its security. If there was an offline version the games NPCs, Chars, etc etc would be stored on your computer, this would make the game easy to create hacks/patches and so on.
Check out http://diablo.incgamers.com/ and browse the Diablo III beta forum, this is a large thread about a group of people trying to crack the game. They've released a patch where you can create a fixed char and enter the world, but the NPCs, Monsters etc are not there - because its handled on Blizzards end.
I'm not going to pretend I understand everything and all the reasons for it because I don't, but from what I've read (not just Blizzard PR info) I get the impression its a good move.
The only issue with it all is what a few of you point out, the exclusion of offline mode.
I also agree that we shouldn't rely so much on the internet to play games, but these days I would hazard a guess that most people are connected online these days (those with a Computer).
Sorry for the long post!