Now multi-minute propagation is interesting, and something I hadn't considered for Bitcoin or Litecoin, so I can see your point. Invalid blocks do result currently with Bitcoin from latency of miners learning of found blocks elsewhere due to the network effect.
This problem should worsen as Bitcoin adoption grows and the network expands. So this could conceivably be a problem for Bitcoin, Litecoin, or any cryptocurrency with a block creation around 10 minutes or less on average. Mining invalid blocks is a waste of resources for miners, which would be a disincentive where there is supposed to be incentive. Frequently occurring invalid blocks also complicates trust in confirmations.
Block propagation times are currently roughly proportional to block size, so it's actually an incentive to mine smaller blocks. I know Luke-Jr has limited the number of transactions he puts into his pool's blocks for exactly this reason. The interesting part is that for a given transaction rate, the average block size is going to be roughly proportional to the time between blocks - so you can have a faster block rate with smaller blocks, or a slower block rate with bigger ones, and in theory they should converge roughly the same.