It's because it can easily be modified to show entities and other players, so in effect a type of radar. As well as this, players could mark chest positions with waypoints, as well as other locations like corn etc. Also, it gets rid of the element of being lost. Sure, our old players know all of the maps by heart, but new players would have a distinct advantage. It's kinda the same as BSM, basically it just provides an advantage over those who don't have it.
As far as catching it goes, there are very little/no giveaways. The only real ways we get it is players who use it and upload youtube videos, or screenshots. It's pretty cheap, we know, but in some cases we are lenient, considering rei's is allowed on most servers. The only other way is when people type in chat, like "I have a waypoint there" or "my minimap is frozen". Again, it's cheap, but it's not allowed on our servers.