But isn't that the exact point? That it would start to be a hindrance to merchants so they'd stop reusing addresses?
Just thought of something... how does the BIP32 protocol addendum limit the usable address space based on whatever seed is generating the string of future keys? Reading the wiki pages now, will edit this post if i find an answer.
What do you mean limit the usable address space? There is no change in the number of possible addresses.