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I actually agree this would be a great way to add capacity to the Tor network if implemented in the way described.

I'd love to hear if anyone else has thoughts on something like this or if anyone know if something like this has been attempted before.

This is exactly the same way how I2P propagates its network, each peer is also a relay.

However, he should have used I2P, it's much more suited towards this project than Tor ever will be.