There are ways to significantly avert cheating, such that cheating would require a hacked copy of dominions with security turned off. They are a quite a bit more cumbersome however, as they require action from several people to host.
For a hosted game, it would be enough for hosting to require that several people connect and provide their password over a secure chanel (eg SSH). One would also need to ensure all players have the same .map, to avoid unscruplous editing.
For PBEM this would be more difficult. A host request could send out encyrpted and time stamped requests to several players, and only host after receiving their response.
IMHO this is a significant problem, not so much due to rampant cheating, but to remove the commonplace suspicion of cheating -- especially should the host have even a slightly lucky start. Admitedly it's probably easier to just play with people you trust, or trade hosting so players aren't in games they host.