The chain will be constantly splitting as long as people are generating blocks using pre 0.3.10 clients.
They will keep generating new blocks which to include the 'Overflow' transaction.
The 0.3.10 network will reject these blocks, but the 'old' network will still accept them.

As long as we have more CPU power in the 'new' network, we'll continue to outpace their splits and they will keep readjusting.
(and then cause another split again when one of them generates a block)

Hopefully they'll work this out when they find that all the blocks they think they are generating never mature.

Precisely.  I've tried to write a simpler explanation but I can't get it out, even though I understand the problem here.

A more complicated answer:  Generated coins with pre .10 clients will be summarily rejected because they are trying to incorporate the transactions that caused the problem in the first place.  This is the cause of the forking going on right now, and it is a good test for the strength of the network to root out bad blocks.

Simple advise:  Upgrade to the latest version of the client if possible.  Get the word out if you can and note this is important if you intend to generate new Bitcoins.  To the best of my knowledge, the older clients will work fine for simply performing transactions (sending or receiving coins) but even there it would be a good idea to upgrade if possible to "strengthen" the network overall and not let those transactions get caught up into bad chains.