I'd bet that it rewriting the eqhost.txt file is just so that internal sony people wanting to test the new login can get to that S. Mitchell guy's login server without somebody stopping by his office every 5 minutes going "now WHAT do I make the eqhost.txt file say to try your new login out?" It'll probly be changed to not overwrite the file after it goes live.
I edited the eqhost.txt file and followed the format it looks like they want, and no crash and no rewritten file, but yeah the connection to the Emu login server just sat there and eventually timed out. Looks like the login handshaking process is gonna be totally restructured. This might not be pretty :(
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