You were able to do that with the cloak and dagger by looking through the transparent knife
And how would this be abusive? I actually think it sounds interesting and would be a fun game mechanic
because you couldn't do it without a clientside mod
thing is though that the server has a limited degree of control over the client- and, beyond that, the way this specific mod would work (probably by getting the co-ordinates of all the players and items in the server and just showing you them through walls) means that anyone with the mod could totally just break one or two variables and have a universal wallhack