You're right that he cheated (in some sense), but I don't think "caught" is the right word since he admitted it when he was asked point-blank. He paid someone to level up his character before he played it, not to stream in his name and pretend to be him.

Paying someone to level your character is officially against Blizzard's rules in all of their games, but their lack of enforcement reveals that they don't care as long as the monthly payments clear. World of Warcraft is overrun with people selling gold and boosts-- given that they're openly advertising this in Stormwind, it wouldn't be a stretch to call it de-facto legal (or at least decriminalized). Heck, Blizzard is selling gold and level boosts on its own website! [1]

[1] https://us.shop.battle.net/en-us/family/world-of-warcraft