(at reduced security if it has software that doesnt understand it)

Well, yes. Isn't that rather key to the issue? Whereas by simply increasing the block size, SPV wallets don't care (same security and protocol as before) and fully validating wallets can be updated with a very small code change.

A 1MB client wont even understand the difference between a 1MB and 8MB
out payment.

Let's say an old client makes a payment that only gets confirmed in an extension block. The wallet will think the payment is unconfirmed and show that to the user forever, no?

Can you walk through the UX for each case?

If I am not misremembering, I think you've sided typically
with the huge block, big data center only end of the spectrum.

It would be Satoshi, that argued that.

I think there must be a communication issue here somewhere. I'm not sure how this meme has taken hold amongst you guys, as I am the guy who wrote the scalability page back in 2011:

https://en.bitcoin.it/wiki/Scalability

It says:

The core Bitcoin network can scale to much higher transaction rates than are seen today, assuming that nodes in the network are primarily running on high end servers rather than desktops.

By "much higher rates" I meant VISA scale and by "high end server" I meant high end by today's standards not tomorrows. There's a big difference between a datacenter and a single server! By definition a single server is not a datacenter, although it would be conventional to place it in one. But even with the most wildly optimistic growth imaginable, I couldn't foresee a time when you needed more than a single machine to keep up with the transaction stream.

And we're not going to get to VISA scale any time soon: I don't think I've ever argued we will. If it does happen it would presumably be decades away. Again, short of some currently unimagined killer app.

So I don't believe I've ever argued this, and honestly I kinda feel people are putting words in my mouth.