Getting error 452 4.5.3 Too many recipients

I have some clients who are using Outlook 2003 to send email to a list
of people.
The account they are using is an IMAP account on a exchange 2003
The list varies in size from 5 to 500 recipients.
The problem is that sometimes (sometimes) the message will bounce back
with an error like the following
Your message did not reach some or all of the intended recipients.

Subject: REMINDER: Final Exam on Wednesday!

Sent: 12/13/2005 9:58 AM

The following recipient(s) could not be reached:

'xxxx@xxxxxxx' on 12/13/2005 9:58 AM

452 4.5.3 Too many recipients

'xxx@xxxxxxx' on 12/13/2005 9:58 AM

452 4.5.3 Too many recipients

1) this error is NOT consistent for every message sent out to a large
number of recipients.
For example:
Client will send an email with 300 recipients and the mail will go
just fine
Client will later send an email with 50 recipients and the mail will
bounce back with the above error.( yes 300 got sent successfully then
later in a separate email ,50 bounced back)

2) The SMTP settings on the exchange server for max recipients is MORE
than the max number of recipients the client has ever tried to send to.
I've seen the setting and set it myself.

3) this error sometimes shows up when the total recipients are less
than 5!

The inconsistency of the error and the fact that the server setting for
max recipients is well above what the client is sending leads me to
think this is a bug with either outlook or exchange.

I have googled this error and found that most people assume this is
caused by a server setting. I agree that this message CAN be caused by
the SMTP max recipient setting, but in this case it is not.
Some people say this is a caused by the junk-mail filter in Outlook and
that a patch will fix it. I know for a fact that the client's
machines are fully patched and they still get this error.

Does anyone actually know how to fix THIS problem/BUG?