So that leads me to my followup question. It isn't possible to "spend" 0-confirm tx with bitcoind? The protocol allows it.
0-confirm transactions can only be spent if they came from yourself (change or send-to-self), since bitcoind doesn't "trust" transactions from other sources until they have at least 1 confirmation. This rule came about after one version of Bitcoin had a bug that caused it to sometimes send transactions with insufficient fees, which would therefore never be confirmed. Normally this would be no big deal, except that other clients simply accepted these transactions and spent them, creating even
more transactions which would never confirm, which would be spent again, and so on
ad infinitum, until finally everyone's transactions were getting stuck because everyone's wallets were filled with coins that were never going to confirm. It was a real mess.
So now Bitcoin will only trust other people's transactions if they have at least one confirmation, which is the way it should be. The old way of just trusting all transactions, confirmed or not, never really made sense, since the whole point of distinguishing between confirmed and unconfirmed transactions in the first place is that unconfirmed transactions
can't be trusted (eg, they may yet be double-spent, while confirmed transactions cannot (at least, not without a lot of further discussion)).
