I think that the proposed solution gives preferential treatment to users who were around long enough (or have enough money) to be on a network where they are assigned their very own personal IPv4 address. If IP addresses mapped 1:1 to users or machines, then I'd be all for using xt_connlimit to throttle users who perform excess requests.

Even if you add a proposed delay, a user behind one of these NATted networks could (unintentionally, I hope) cause a DoS by sending lots of requests to make the queue unreasonably long, which, to someone behind the NAT, is just as bad as a server ban.