The report button could have a a flyout menu with a few options for their offence. Things like, suspected cheating, abusive, doesn't play well in a team or whatever.
After a while, each time the player goes to play a game, the match maker takes in to account their history and matches them up with similar players. That way, all the cheaters don't end up being banned they just play with fellow cheaters and people that don't do team work just end up in games where everyone else is a lone wolf.
Could work? I haven't played MW3 though.