right now there are 675 tx/block on average.
each pay around 0.0001 BTC/tx in fees.
that equates to 675*0.0001= 0.0675BTC/block in tx fees.  that is miniscule and accts for why miners construct small blocks mainly to capture block rewards.

if the cap is removed, i figure that to be economically attractive for a miner to create a bloated block just for the sake of mining for extra fees they would have to be at least worth 50% of the current 25 BTC block reward or 12.5 BTC in fees, give or take.

that equates to an extra 12.5/0.0001= 125,000 tx's required per block.  where are those extra tx's going to come from?

answer:

1.  they won't magically appear until the Bitcoin economy grows itself to that point which will take several years.
2.  an attacking miner can try to manufacture them himself to torment small miners.  would he do this?  NO.  the creation of an extra 125,000 worth of tx's would cost time and energy to create, sign, broadcast and then hash the POW for all those extra tx's and for what purpose?  some fuzzy theory about driving unspecified small miners out of business as a result?  no, he will continue to mine small, efficient blocks according to the avg output of the rest of the miners mainly to chase the block rewards.  this dynamic will continue for many years.

here's how i answered theymos on Reddit:

[–]theymos 2 points 2 days ago*
The network needs to completely agree on this. Say that there's no limit, but most miners are producing 1 MB blocks for whatever reason. Then someone mines a 3 MB block. If half of the economy accepts blocks only up to 2 MB in size and half of the network accepts blocks up to 3 MB in size, then these two halves of the network will split forever and never again be able to transact with each other (as long as they don't change). This breaks the network.
There are various things that you might think of to solve this problem, and they've probably all been thought of before. The most common first-impression idea is that you'll have miners decide it. (In fact, you may have been implicitly assuming that this is how it would work, but currently even if 99% of miners mine too-large blocks, they will be ignored by the Bitcoin economy.) The problem with this is that miners nearly always have an incentive to create larger blocks because it gives them higher fees, but they don't have much incentive to be worried about the long-term consequences of larger blocks. You should not be prevented from running a full node (the only type of node with any real security) because a handful of miners in China decide to mine blocks that are too large for your bandwidth/hardware to handle.
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[–]cypherdoc2 1 point just now
the way i would answer this is where is the tripling of tx's and the fees required to mine a 3MB vs 1MB block going to come from?
if that miner is an attacker, would he manufacture his own fake tx's to create a 3MB block? no. it would be too expensive and risky for him to do so, not only from time and energy needed to create them and hash them into a valid POW but also in terms of foregone block rewards that he might miss from being orphaned and screwing around with the system.
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edit:  the only caveat to my argument, in the 3MB vs 1MB case, is if the bloating miner can pull enough unconfirmed tx's that have been constructed by ordinary users out of his current set in his mempool in order to create that 3MB vs 1MB block.   which is why i asked this:


but it would still be a risk in terms of increased network latency with orphans and the foregone honest blocks.

No it is easy even now to keep your equipment running and adjust the hashing rate with software. The result is you are always on but only consume loads of electricity when mining at a high hash rate. Effectively you are always mining and only mine effectively when it's profitable.

The scenario was discussed at length.

The most obvious risk is that the larger pools could easily drive others out by pumping up the sizes creating more centralization.  Essentially a bandwidth attack.

what you claim sounds reasonable but i'm not entirely convinced given the growth in storage and bandwidth capacity over the last few years.  nonetheless, i was very excited by the pruning release.  that could and should solve the storage issue completely.  as for bandwidth, i'm hopeful for something along the lines of IBLT.  we'll see.

can you repackage this argument and clarify the point?

thanks.  now i understand your point.

but the attacking miner still won't do this b/c it is highly expensive (CPU wise) to have to construct all that garbage, broadcast them (full nodes won't validate/relay the blocks if the fake 125K tx's are not in their unconfirmed tx set), hash them into a Merkle tree, & POW the bloated block.  and the risk of orphaning is way high.

Excellent. So now if an altcoin is released with this direction, then no one will know if it was me or not, because it is clear that others visualize the concept.

In fact, I was not even the first person thinking along this direction. At least bytemaster and the author of Decrits were doing delegation in their designs.

Foreign governments are draining their gold out of the FED and back to their home countries, it's dropped below 6,000 tons for the first time since WWII. Coincidence? I think not.

Also notice that the last set of withdraws starting in 2007 before the big crash.

another way of saying it is "you can't have a universal money if it's not universal".