I think Pokecheck fills a very good niche well. It allows people who are willing to cheat to cheat, but it doesn't force anyone else to use them. By tagging cloned/illegal pokemon with a ribbon, it makes illegitimate pokemon easy to spot, the way it should be.
I don't believe it's any problem if someone breeds from a hacked Pokemon, since the resulting pokemon is naturally generated.
I respect that some people may not want to cheat or own Pokemon that are otherwise illegal, that is having attributes that are not possible naturally. But I define illegal as anything that is obtained by exploiting the code. This does not include the art of RNG abuse, which exploits knowledge of how the PRNG in the game works, not the game code itself.
I don't like that some people might think that Pokemon bred from these "illegal" Pokemon are any less legal. They're not. Breeding re-introduces the randomness that the game designers intended, so requires the user to work at breeding.
I don't believe it harms trading, because there will still always be a demand for "Legal" Pokemon. The ease of getting "Hacks" is high. A trade will still always be as it's intended, a social experience, and it will become more valuable.
I actually believe Pokecheck is an improvement. It discourages people from passing off illegal Pokemon in a trade because they can get exactly what they want, made to order, from Pokecheck instead of scamming people who put in good honest work by legitimately obtaining their Pokemon in the game.
Pokecheck also maximizes the good one can do by putting hard work into creating Pokemon and distributing them to many people, rather than one, and do so without contributing to the problems that make Wifi trading unusable to players who don't like illegal pokemon.