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2) in games that stream assets to you like open world games you will have performance problems as the disk can’t keep up with demand. This will manifest itself as “hitching” as the disk is utilized or texture pop in issues
3) steam doesn’t support libraries on external drives, the most common side effect of this is your games being randomly “uninstalled” when the disk blips out of existence and steam reacts
You won’t be VACed for that
But as noted above you’ll have issues with games and your library by using an external drive. You can try to mitigate these issues by using USB 3.0 or eSATA.
The only way you’re be VAC is if your cousin has cheats installed on their computer
https://steamcommunity.com/groups/Master_Race_Geeks/discussions/0/1735466157768391213/
As for VAC - there's nothing to fear.