I'm aware of that, but what I need to know from you is what happens when there's too much data to split. I was assuming raising the packet rate would allow more data throughput instead of the server selectively omitting information.
If there is too much data to send in one packet the server will prioritize updates. You will get updates for objects that are near you first, projectiles that are heading towards you are prioritized over ones that are heading away from you, etc. It keeps track of how many times an object update is skipped and that factors into prioritization so you get an update for everything at least once in a while (this can manifest as seeing players move intermittently). People in dialup mode are hitting the "not enough room in the packet" problem all the time and it works fine, so you shouldn't really
need more bandwidth.
Note: currently there is a bug in Blockland where you receive player updates when you should be ghosting bricks. It is possible that if there is a lot of player activity, brick ghosting will take a really long time or stop entirely. I didn't really touch any code relevant to this directly, so the change is subtle and not an obvious fix.