I don't like this idea at all: it's too complicated and it's inefficient (you will not have the time to react before the crash happens: the algorithm must react fast and in real time, also taking into account the inertia resulting from the fact there's a significant delay between the moment a texture is requested with a given discard level and the moment it is fully downloaded and decoded: to reduce this texture's discard level, the former request must fist be completed, meaning there is a delay between the moment you increase the discard level and actually see the memory consumption diminishing).
When on, the algorithm should prevent any crash related with virtual memory space exhaustion to happen. If you disable it, then you're left with the behaviour of all other viewers that will invariably crash at some point. Of course, if you insist on caming around after the viewer reset your camera and told you it's about to crash if you continue doing so, then you will crash... Instead, just wait for the memory indicator to turn back to green, then you can again cam around and increase your draw distance.
If you wish to avoid seeing the memory consumption kicking in too soon, you must adopt settings that are suitable for your system. If you got less than 4Gb of RAM, then you will likely see it kicking in anyway, for mesh viewers are memory-hungry; this is not only due to mesh support itself, but also to the new physics parameters support, the necessary memory alignment of every data structure on 16 bytes boundaries to allow the use of SSE2, and the memory overhead resulting from the use of tcmalloc.
Even on a 4Gb+ RAM system, things such as a 512m draw distance in a crowded and/or heavily textured area will likely make the algorithm kick in to prevent crashes. I recommend a 256m draw distance (which is more than enough in most cases).
One setting that is often overlooked is the "Texture Memory" (in Preferences -> Graphics -> Hardware Options): 512Mb (in the graphics card) corresponds to 1Gb of memory consumptions in the viewer (which may even overshoot !). Lowering this setting might well help, at the cost of more blurry textures on far objects.
Also, on systems with 4Gb of RAM or less, it's usually best to keep "Allow Swapping" on (the algorithm will then kick in later, but still in time to avoid crashes).
Finally, do make sure that your system is properly configured to let applications use up to 3Gb of virtual space (on 32bits Windows, the default is only 2Gb). See
this message about how to set this.