The number 50 was in all likelyhood a random figure… Changing the maximum possible number of contracts for a character was never the point of the discussion.
CCP does not give a flying waste about lag. Not only have they introduced structures to the game that necessitate huge numbers to keep and destroy them, which results in tidi wherever you go; they also favor huge groups over smaller groups, which also is the prime recipe for laggy tidi experiences.
That aside, if people do what you described, you can petition them and they get a temp ban for deliberately causing lag. Personally, I would like to do as many people as possible to do that so that a couple of the morons are gone from EVE for a while.