Maybe I'm getting this wrong but wouldn't this scheme imply that a miner is
incentivized to limit the amount of transactions in a block to capture the
maximum fee of the ones included?

As an example, mined blocks currently carry ~0.8 btc in fees right now. If
I were to submit a transaction paying 1 btc in maximal money fees, then the
miner would be incentivized to include my transaction alone to avoid that
lower fee paying transactions reduce the amount of fees he can earn from my
transaction alone. This would mean that I could literally clog the network
by paying 1btc every ten minutes.

Am I missing something?

Daniele