Soooo, how do you cash a fake MO ? As explained, you'd not have a problem
since you'd find out it's fake before any money changes hands.

You can't, that's the scam.

But scammer is relying on the fact that the bank will look at your account,
see that you have enough in your accounts to cover the bogus MO, and
give you the cash. Then when the bank realizes the MO is bad, it's YOUR
account that gets debited to cover the shortage...