I have observed that when you send an email to multiple recipients in the same domain, if one of the intended recipients does not exist and the destination server rejects the message with SMTP status code 511, Exchange erroneously bounces the message for ALL intended recipients at that domain even though only one was incorrect. I have seen instances in the newsgroups of other people experiencing and I have done much research to confirm. If the message is rejected with SMTP status code 550 on the other hand, Exchange handles it properly and only reports the bad addresses as failing. Good addresses still succeed. Hotmail for instance, if you send to a non-existent recipient at hotmail you will receive the following error: 550 Requested action not taken: mailbox unavailable As per RFC 1893 http://www.ietf.org/rfc/rfc1893.txt: 5.1.1 Bad destination mailbox address The mailbox specified in the address does not exist. For Internet mail names, this means the address portion to the left of the "@" sign is invalid. This code is only useful for permanent failures. 5.5.0 Other or undefined protocol status Something was wrong with the protocol necessary to deliver the message to the next hop and the problem cannot be well expressed with any of the other provided detail codes. As you can see, 511 is the correct SMTP status code to return if a destination email address does not exist. 550 is the incorrect status code to use for an invalid recipient address, however Exchange treats 550 correctly and 511 incorrectly. As a user of Microsoft Exchange, I am requesting that this behavior be ammended so that Exchange will treat SMTP status code 511 the same as it treats 550. Thank you for your time.

Please disregard the above post. This is NOT a bug in Exchange but a bug in the remote server. I had not read RFC 821 and now I see that the remote server implemented RFC 1893 incorrectly.