I think that Satoshi Dice is being used as a red herring and a scapegoat to kick the can down the road.

Luke accuses them of abusing the network. Our bandaid solution is to encourage miners who are amenable to blacklist their transactions (which is their prerogative, sure), and to take other steps to hassle SD (client changes to encourage higher fees to leave SD behind in priority, etc), so that maybe they'll become unprofitable enough that they stop representing such a high percentage of transactions and maybe we'll gain some breathing room before ordinary txn start fighting over their placement in blocks.

The question I am forced to ask is: are we really solving a problem this way, or are we spending our time on whack-a-mole?

SD is unquestionably profitable right now, and the allegation is because they are offloading much of their expenses to the rest of the network (blockchain bloat, premature block size limits reached, etc). So is it our job to classify this as a moral failure in SD and in the thousands of users who play it, to be punished by edict, or as a systems failure whereby we've built a transaction system that allows users to offload their expenses in this allegedly dangerous way?

Since SD is profitable and has to be targetted with filters to resist, what happens when a dozen SD knockoffs launch that evade filtering attempts? If they have profit incentive to do so, what will deter them? Should we really be blocking "1di" address prefixes (give or take), or should we instead be building something into the txn priority protocol that either discourage address re-use or re-spending of funds not yet confirmed?

If people want to spend their individual participatory power to hassle SD, that's not my business. But that probably belongs in a different thread. The problem of txn rate scalability and altering the system if possible to naturally resist anyone from being able to offload their expenses by making the txn fees you pay finance the costs you incur should be what our discussion is about. Be it because we've hit soft limit with SD, soft limit without SD or hard limit.

SatoshiDice is nothing but a symptom of an imbalance in our incentive structure. The sooner we solve the root of that problem, and enshrine this "social contract" luke holds so dear into the protocol itself somehow (where it can actually be enforced by technology instead of whinged about in forum drama), the more time we have to implement the solution before crashing into a wall or losing ground to a competing currency system.