First of all thank you for a better explanation than i could come up with. I do have to miner questions i'm not sure about if i got it right.
1. Regarding step three. Can the node with the lowest consensus.h limit hold back/block the network by not upping the limit while still running?
2. Regarding the bilateral split. Why do the Node and the pool need to intentionally ban the others to become a small network of their own? I thought this happens automatically since they assume they have the longest legit chain.
1. if nodes and pools decide 95% of the network is the metric then it requires 5.01% of the network to hold up block growth with 5% possible orphan heaches. if 75% of the network is the metric . the 25.01% of the network is needed to hold back growth with upto 25% orphan headaches if pools tried to exceed limits.
what you need to also take into account is nodes might have 75%-95%.. but pools may also have their own safer metric to reduce orphan risks
EG nodes at 75% where consensus.h 4mb and policy at 2.5mb
EG pools at 95% where consensus.h 2.499mb and policy at 1.01mb
for instance. resulting in pools only making blocks 1mb-2.499mb before seeing issues and pools only moving passed 2.5 if 95% of pools agree and 75% of nodes agree..
2. if an orphan game results in bilateral split(it doesnt).. we would be having several altcoins being created a week for the last 8 years just because of orphans
https://blockchain.info/orphaned-blocksorphans KILL OFF opposing blocks. to keep to one chain
to avoid orphaning a block. the nodes need to ban the opposition to not see/try syncing to oppositions blockheight and to successfully build their own.
othrwise they end up in orphan hell rejecting their own small network because its lower blockheight, to instead request data from the nodes with higher blockheight... but then rejecting the oppositions because although they have higher blockheight the data (blocksize) breaks the rules when they get that block they request..thus being left unsynced.
so it requires not connecting to that main chain. to avoid seeing it to then happily grow their own chain (as clams2.0)
remember ethereum was not a CONSENSUS fork it was a bilateral split involving banning nodes. hint: "--oppose-dao-fork"