It does only turn away that one person that tries to connect. At the wee hours of the morning, it is useful to have a hard to get into server as people will typically wait to connect to that server. If the server is continuing to remain full, as it has, I still don't see a problem with it.

The reserved slots vary, I'm not quite sure how it works as I do not have one, and I do have to wait to get into the server.

Seeing as Mr. Tea does ban throughout the night, I think it is working and there have been a good reduction in hackers on the server.

Again, it's one slot, the servers are still full. There shouldn't be a large problem with this. If you want to play that badly, then buy a reserved slot.