Some more documentation on this bug:
github.com
issues.frontierstore.net
I literally just put "cheat definition" into a search engine and clicked the first mainstream dictionary website (Merriam-Webster) that came up. It lists five noun definitions, four of them clearly feature intent, including the first.
www.merriam-webster.com
If Merriam-Webster is too American for some, well the very next dictionary destination on my search was Cambridge and their first two definition of the noun 'cheat' also implicitly feature intent.
dictionary.cambridge.org
These are some of the largest print and online English language dictionaries that exist. So, I'm certainly not cherry picking definitions. The definition I use is the definition I most often encounter as native English speaker residing among other native English speakers. If I say someone is a cheat, pretty much everyone knows that implies dishonesty...someone with an intent to deceive or defraud.
Dictionaries aren't often authoritative, language being a dynamic thing, but up to date ones are usually representative of the way words have been and are used. If you are separating intent from cheat, cheats, cheating, or cheaters, then we are not speaking the same language and I do not believe that Frontier means what you mean when they say "cheat".
Part of the issue is that hull resistance was given a different baseline than shields for diminishing returns. The baseline for shields is an offset from whatever the shield generator provides. The halving on hull resistances starts at a fixed value, one which some bulkheads can start out exceeding. There still should not be this roll-over effect.
But yes, the utility of this bug, even with malicious intent, is quite small. The only advantage over other non-bugged builds is the ability to reach a level of thermal resistance that roughly doubles effective thermic hull integrity at a cost to raw effective integrity in every other damage category. As you say, the main use for this balance would be to absorb station laser fire...a use that I would certainly consider as evidence of intent to exploit a bug.
Wrong resistances on alloys · Issue #483 · EDCD/coriolis
This build has a wrong value as armour thermal resistance. Correct stats:
Issue Tracker

I have. I can't find any English definition that calls out intent as anything to do with the definition of a cheat (noun). The verb has plenty of intent, but it's not the word in using. The closest i can find is the definition of a (person) who is a cheat, one who cheats... which is one of many covered by the same source that also includes my use.
So what next? I cite a reference to the definition, you claim its not authoritative for whatever reason... this all gets dead-ended if we're not going to acknowledge the meaning of words.
I literally just put "cheat definition" into a search engine and clicked the first mainstream dictionary website (Merriam-Webster) that came up. It lists five noun definitions, four of them clearly feature intent, including the first.

Definition of CHEAT
to deprive of something valuable by the use of deceit or fraud; to influence or lead by deceit, trick, or artifice; to elude or thwart by or as if by outwitting… See the full definition
If Merriam-Webster is too American for some, well the very next dictionary destination on my search was Cambridge and their first two definition of the noun 'cheat' also implicitly feature intent.

cheat
1. to behave in a dishonest way in order to get what you want: 2. to have a…
These are some of the largest print and online English language dictionaries that exist. So, I'm certainly not cherry picking definitions. The definition I use is the definition I most often encounter as native English speaker residing among other native English speakers. If I say someone is a cheat, pretty much everyone knows that implies dishonesty...someone with an intent to deceive or defraud.
Dictionaries aren't often authoritative, language being a dynamic thing, but up to date ones are usually representative of the way words have been and are used. If you are separating intent from cheat, cheats, cheating, or cheaters, then we are not speaking the same language and I do not believe that Frontier means what you mean when they say "cheat".
And they seem to do it iteratively for every module added, rather than calculating all the multipliers then applying the diminishing returns at the end. If they did the softcap last in the calculation then Funny Hull wouldn't work.
That said, it's really only useful for station ganking since station defences are thermal reverb lasers. It's less useful than more conventional builds against absolute damage (ie. most meta pvp builds with plasma) and since most funny hull builds are shieldless their modules are extremely vulnerable to missiles.
Part of the issue is that hull resistance was given a different baseline than shields for diminishing returns. The baseline for shields is an offset from whatever the shield generator provides. The halving on hull resistances starts at a fixed value, one which some bulkheads can start out exceeding. There still should not be this roll-over effect.
But yes, the utility of this bug, even with malicious intent, is quite small. The only advantage over other non-bugged builds is the ability to reach a level of thermal resistance that roughly doubles effective thermic hull integrity at a cost to raw effective integrity in every other damage category. As you say, the main use for this balance would be to absorb station laser fire...a use that I would certainly consider as evidence of intent to exploit a bug.