cheating is bad because ideally it's bad for you in the long run, and if EVERYONE did it, there'd be anarchy. What would the point of school be (IE, paying teachers, taking the time to teach kids) if no student learned anything but they all got perfect grades? I know that's a bit of reducto ad absurdum, but if you let one kid cheat, that's the scenario you invite.
The problem is that we have a system currently where cheating is sometimes the best option for kids, and it shouldn't be, because the only person they're cheating is themselves, in the end, but in a system where everything is concentrated so hard on the final grade, getting a good high score so you can succeed later down the road, that just breeds the wrong attitude.. I don't have an answer though, at least not one that would work right now in our society. Ideally we'd go back to a point before we even had tests, where teachers would talk to students and learn what they'd learned by talking to them, and mark them on that. Can't really cheat when your test is "tell the teacher what you learned", but there are so many students, and we make teaching such a thankless, low paying chore, that there are so few teachers, or people willing to teach, that I'm sure that system would not work..
but it would be ideal.
I also don't think teachers should have such a zero tolerance for cheating, but I can understand why they do - it's impossible to police all the kids they have to deal with, so they need the punishments to be ridiculously harsh as a deterrent, but expelling a kid for cheating is like shooting someone in the face as punishment for catching them shooting themselves in the foot. It's just not a great system we have in place, and it's just easier to let those kids that cheat fall behind society when those are probably the students that need the most attention, not pretty, but short of going back to some pre-industrial model of schooling.
Another reason it's strictly bad, at least in the current model, is that you're cheating all of the other students in the class. Whenever you cheat, you're hurting everyone, yourself, your teacher and your classmates. When merits are handed out based on aptitude, when you cheat, you're not learning what you need to in order to grasp what you need to in order to progress properly, and even if you're successful, you're basically stealing those merits from someone else that earned them, when you need more help.
I mentioned schools because it was in the OP, but Cheating in general is bad because you're doing harm to yourself. You might argue that it allows you to move past school and get on with life, but the point of school is to make you a smarter, more educated person, and if you're not, then you're just wasting everyone's time no matter how successful you are. You're stupid at the end of the day because you chose not to bother learning.