I will just say this, not letting the market move in whatever direction, and hitting the * wall, will cause repeated explosions..
I think the appearance of the "*" is indicative that the price of a buy is too low and so too many people have gone long; and ergo the price of bitcoins is too low. But how can they be low if people have been buying? The answer is that they haven't been buying.
A short term solution (if Mr Bitcoinica is listening) is surely to increase your spread the closer you get to your reserve. Voila, negative feedback, problem solved.
There will be crying and gnashing of teeth that the spread is too high; but the market will be self-correcting again.