Yeah I've seen photos of something like this. The one I saw was UK police I think.
This might work in high traffic areas but where I am there just isn't enough people on bikes to set up something like this.
If the po-po stop a kid on a bike they believe is illegally modified, just confiscate and impound it where it can be assessed.
No one cares if a bike can propel you 3km/h over the limit because you changed the tyre diameter. Even if you updated the software to remove the limiter, that's not really going to make much difference to safety if I'm honest. It's the bikes with throttles and big hub motors that spin you up to 20 or 30km/h over the limit that are the problem.