V400 should be latest, could you check if the issue is still happening there? There shouldn't be any caps on list length.

Instance blocking only blocks communities on the instance, not the users. If a user from the blocked instance posts to another instance you don't have blocked, you still see the user.

That said, I have also noticed USERS I have blocked getting unblocked recently, and they are not simply on an alternate account.

Edit: It seems the users I am seeing become "unblocked" is actually an asshole going around impersonating other big accounts (mainly mods and admins). Has nothing to do with the app.