Yes, they do get cancer down there.
I had an elderly Paint gelding with cancer on his penis. He had one large lesion (about the size of a quarter) that I treated with blood root and it actually shrunk the lesion and it healed up completely and looked great.
My vet said it is common on horses that have pink skin down there and he really didn't even think it needed to be treated, because in his opinion the horse would die of old age before the cancer became a problem. But I opted to go with the blood root save and that worked for my guy......on the one lesion that I could see.
A few years later I was cleaning his sheath and my hand came out bloody, so I knew he had more cancer higher up in there. But like my vet said, the horse ended up being put down for unrelated health issues so the cancer never really caught up with him.
I would say if you like him take him. Cleaning would certainly make him more comfortable (if he tolerates it) but I don't think the cancer will go away just from cleaning him.
Now the blood root I bought as a powder at the health food store and mixed it with triple antibiotic ointment and smeared it on there once or twice a day (my guy dangled a lot and allowed me to do this). There is a commercially available product which I believe is called Xxterra that has blood root and some other ingredients in it that is made for sarcoids. You could also ask a vet about that.
My guy got itchy and uncomfortable from the blood root before it got better, so I would really only do that again if the horse had a single lesion I was trying to treat. If the whole sheath/penis area is cancerous than I wouldn't subject the horse to the blood root treatment. I would just keep him as happy and healthy as possible and hope that his age catches up to him before the cancer becomes a problem.
I'm not a vet, so that's just a layman's opinion.
My guy lived into his early 30's and when I finally decided to put him down it was due to a back injury and arthritis issues. I was probably aware of the penis cancer from when he was around 25 years old.