it's always impossible to prevent cheaters, you can just block the holes once the hackers find them... Open source would make it easier to patch the holes once their found, but that's for another topic.
I don't think there is a pure open source game engine, there are a number of 3d engines out there though, CrystalSpace is one I can think of off the top of my head. Other than that, Quake1,2 and I think 3 souce has been released, sort of a limited open source engine as far as I know. Those are pretty damned solid engines though, so you should, if you really wanted to, be able to make a GTA type game using Quake2 at least. Gonna take a while though
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