What does the Bitcoin client do when it receives conflicting transactions?
I can't speak for what it does every time but I just tested Mr. Schwartz's comment, so I can speak for what it did this one time. I remote controlled a geographically distant machine running an identical copy of Bitcoin on it and my local PC (with identical wallets). I sent identical conflicting transactions for my entire balance within a few milliseconds of each other (atomic clock sync &amp; timers - don't ask) and just as expected, both transactions showed in both clients at 0/unconfirmed and only one made it into a block. The other disappeared after a -rescan

Curiously, after the -rescan the second transaction doesn't even show in a bitcoind listtransactions dump which seems odd to me. It seems like such erroneous transactions should be recorded and marked with a special status, similar to how orphaned block rewards are - this is an accounting system after all and under certain circumstances this could be "destroying evidence." I'll make a comment next time I'm on GitHub and see if someone bites.