Yep, we can all do this. And we can also all easily see when someone who just figured this out is playing around: You can put up 100 x 10 BTC bids or asks but you can't put up 1 x 1000 BTC - thus everybody can easily see that someone just figured this out. A bid order of 100s of small orders is quite easy to see.

It's no big deal, someone buys or asks from your "wall" and the orders cancel after stretching your margin to the limit.

You should be careful placing toy walls close to the spread if the book is thin overall because at some point I'll just FOK your order until you're at your limit and move the market with real actual funds backed by my exchange wallet (or trading wallet if you put a bid up) and then you're toast. And we can do the math, if you put up an ask of 1000 BTC with 100 orders when it's easy to see that you're only able to short 10 BTC - period. Thus I'll just put a real 100 BTC bid there and move it up until you get a margin call or your jimmies get sufficiently rustled. And I'm no big fish at BFX just because I can put real 100 BTC bids and asks up, there are quite a few 1000+ BTC position players in our sandbox.

It has been possible to add 100s of orders of your maximum order size for a very long time and it's never been a problem except for those who do it for fun.