This is the first update to Bitcion that I'm not jumping on and grabbing right away, because I think the choice of checking transaction types in blocks is not necessarily a good thing... at least while the question is undecided in the community.  It does impact the network but in a subtle and political way.

At the very least I wish that Satoshi would at least express his view on what he thinks about putting extra data into transactions beyond pure financial data into transactions, and I think this is only going to start an arms race for those who want to play with scripts and those who are trying to keep scripts "pure".  All that has happened here is to simply lay the gauntlet down to get past the "IsStandard()" check and find transactions which can pass that test but still contain other data.

ArtForz (15+% of the network), tcatm (2Ghash/s), and doublec (pool maintainer) have stated that they will not use IsStandard. Non-standard transactions will therefore still be possible.

When I have time, I will produce a patch for Bitcoin that will remove all non-network-enforced restrictions on transactions, so that other miners can easily also be configured to include these transactions.

Please start your own block chain, rather than forking the network like this.

I hope it is clear the havoc that your push to include non-currency data is causing.

There's been exactly one block with non-standard transactions:
  http://blockexplorer.com/b/71036
... and it contained no fees.

HOWEVER:  jgarzik, you're over-reacting, too.  This will not cause a block chain split; all clients will accept blocks containing non-standard transactions as valid.  Most (many?) just won't put non-standard transactions in blocks that they generate, and won't relay them.  There will be no havoc.

No, this isn't going to cause a block chain split, it is going to cause a fork of Bitcoin.  I just hope that is thought through very well, and I don't think it has been.

Since transactions aren't being forwarded that fail the IsStandard() algorithm, those who want to put "non-standard" transactions into a bitcoin chain must either hard-connect to a miner who would accept these transactions or force some sort of ad-hoc way of setting up a second tier in the network to find nodes that will accept these kind of transactions AND likely put them into a future block.

That only one block may fail at the moment with this test is ignoring the current discussion where conceivably almost every block in the near future may have some form of these "non-standard" transactions.

Transaction fees will pay for the generation of the chain in the future, therefore if the BitDNS guys (or any other group) want to include carefully crafted transactions in the chain, then they must include the appropriate compensation for the generators, or likely their transactions will be dropped.

Even later in the future, those who include extra things without compensation in their blocks will get their blocks orphaned by the chain.

I for one will upgrade my client to v.18 until their come a time when it is profitable for me to accept non-standard transactions.

No, it'll disadvantage people who refuse to pay fees. What they're storing in their transactions is irrelevant.

Rather, it will increase everybody's fees, and incentivize creation of a currency-only chain without all the data spam.

No, as no generators will want to block fee paying (profitable) transactions.

When adding non-currency data into the block chain becomes common, then the there will become a strong economic incentive to increase the block size as necessary. Thus keeping the transaction cost down.

In the long run, extra data in the chain will _reduce_ the relative cost of a currency-only transaction, because the currency-only transaction uses much less data, compared to the data transactions, per transaction.

Sorry I have to disagree with you,  the transaction fees are based upon the 'cost' to generator to include the transaction.  The cost is directly related to the amount of data needed to be included.

In the future there will be no 'hard limits' on block size, only the risk that the block will be rejected and orphaned by the chain as it is to large.

When a generator deciding what transactions to include, if the network is already profitable with very large blocks, (eg. 20mb+ as they have much non-currency data in them), then including very small 'currency' transactions have a minute cost. For example, 20,000,000 vs 20,000,010.

If the block chain is restricted to just currency data, there is much less incentive to improve the efficiency of handling large blocks data.  Therefore the relative cost will be much greater... 500,000 vs 500,010. Therefore the transaction fees required for small amounts of data are likely to be higher on a system that only induces currency data.