One of the reasons why I think Badspot does not give out source code and encrypted all default game files is because he didn't want people to find exploits in the code.
In truth, Blockland is very much hackable, with the correct resources. Fortunately, you cannot get a hold of the resources in any way, making hacking Blockland a very tedious task to do, if not impossible at the current state. Now, if a large group of hackers decided to hack Blockland, they would probably achieve it because there are multiple experienced hackers looking for key exploits in the hidden games files.
Yes, Aimbot is considered a "hack" but all the aimbots out there are very inefficient. Also, it is worth noting there is no .cs.dso converter to date, so if Badspot lost all of Blockland's open source code, then he would not be able to work on it.