I thought there was only 500 bytes of space allocated for free transactions, that block has over 3k and there aren't even any paid transactions.
There are only 500 bytes of space allocated for low-priority free transactions. By sending 577 coins in a transaction, that makes the transaction high priority. So that's when the rate-limiting code kicks in. You are right, we could use the rate limiting code to reduce the number of free transactions per block, but that will limit non-spam free transactions also.
If we can't handle a dozen transactions a block, we need to just shut down. The bloat is negligible. I say just ignore it.
Isn't booth Litecoin and Bitcoin pretty doomed anyway unless it is possible to implement a cut-off point for downloading the chain that at least keep the file under a few gig? So, does it really matter in the long run how big the chain gets?
BeeCee1 makes a good point why this is not about the long run:
https://bitcointalk.org/index.php?topic=51915.msg622386#msg622386Right now, exchanges, pools, and block explorers are all having trouble dealing with this transaction spam. True in the long run, we'd all have to deal with it, but Litecoin is still young. It seems silly that 1 spammer can cause so much pain for everyone else that wants Litecoin to suceed. So I'm just trying to do what I can to fix this problem.
Problem is if you can block real transactions that should have been free by doing this...
Yes, I'd like to avoid that.