Hi Peter,
Our customers strictly want to get their mail - so we prefer flagging over blocking. Looking around in my server logs (and postmaster accounts) makes me feel that most ISPs today are much more in blocking. Don't they all have huge problems with people complaining? We already have...
We do aggressive blocking and we tell our custommers that if they want their maildomain hosted on our servers, they get a good spam filtering system but that we do not tollerate suspicious emails sent from even more suspicious smtp-servers. Most of our custommers are thankful because they get very little spam. From time to time I have to whitelist a sender emailaddress, but it's very rare. Most problems arise from small businesses that have their own exchange/groupwise/whatever-smtp-engine and don't use the mailout of their provider but instead send it from their adsl-IP.
Jean-Pierre