I don't pvp, so this may be a dumb question. Are these hackers new players or people that have been around for a while? Is there a way to find out how many of them are brand new? If it's a good percentage of them, maybe you can put in a waiting period for pvp players. This won't affect any loyal customers, but if someone is logging on and immediately hacking, perhaps a waiting period of 24 hrs, 5 days, 10 days; whatever, may deter them and they'll go seek another server to show off their 'awesomeness'.
If it would be too hard to put a timer on each player, perhaps another contingency would prove useful. Off the top of my head, maybe a player has to belong to a town or complete a tutorial/quest that will remind them of banning should they choose to use hacks. Make them work to get to pvp and maybe most will give up before wasting everyone's time.
Just a thought. :)