If you violate the game's user term agreements in any ways like installing a mod, an invincible enemy armed with a giant scythe will be summoned and publicly decapitate your character in front of everyone.
If you use any cheats that give you abilities or open levels early, Grunty will warn you before she decides to erase your save pack. Thankfully, only the save pack you cheated in will be erased.
If you unlock too many Gameshark codes, the game will become buggy and unstable. If you save your game before quitting out, the bugs will remain in the game permanently.
If you manage to find a way to cheat the game into letting you steal items from the shop, the game will guilt you by branding you a thief for the rest of the game. If you return to the shop for whatever reason, the shopkeeper will zap you to death in an instant.
If you type in too many cheat codes at once like granting yourself 10 million coins, the Death Star will be summoned to destroy your various buildings.