Is replacing tx_LS and tx_RBFr with tx_HS at step 7 really allowed?
Personally I consider it a design flaw of RBF. The whole point of the BIP 125 Rule #2 unconfirmed inputs rule is to avoid this type of situation where an unconfirmed input causes the replacement to be less valuable. As this example shows, the rule didn't go far enough - limiting unconfirmed inputs to coming from the same replaced transaction would fix this I believe.
Sure, the current RBF rules have numerous issues. Still, an improvement proposal should be based on the status-quo and take note of related work.
reply