Gavin Andresen - 2011-03-01 18:07:55

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You can generate a 1MB block with only free transactions in it and it will get accepted (maximum block size is 1MB, although the standard bitcoin client will never generate blocks larger than 500K).

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The problem isn't the pool payout-- the problem is that people participating in the pool end up with wallets full of tiny (e.g. penny-size) transactions.  When they go to spend those tiny transactions, they're bundled up together to make a transaction that is small in value but large in size.

Pools can mitigate the problem by requiring larger minimum payouts (e.g. 1 BTC instead of 0.01 BTC).