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Please, don’t buy the stock. It’s a classic retail investor trap
The issue is that once it's in the S&P500, Russel, Nasdaq100 etc indices - everyone with a pension or tracker fund will be buying it without thinking
Yes. I am severely reducing my exposure to these indices finding alternatives.

My impressions is that US investors also have a special love for the S&P500 and could likely benefit from a non-US bias.

The new thing lately is ETFs that are "Whole-Market minus Microsoft" or "Whole-Market Minus Magnificent Seven". You can achieve similar ends by combining a whole market fund with direct short positions if you're an institutional investor, but it gets a little needy of your attention and your calculator and your fees to maintain those positions as a low-cap retail investor (just buy a put a day or something?).
I am explicitly avoiding these indices until this exploit is fixed. The lack of diversity in SPY and the like is already bad enough without these pump and dump schemes being added to the mix.

Buy alternative ETFs with similar performance and low fees. VIG is one example.

Not great when every other share price collapses as they get sold as funds are rebalanced.

Almost every stock in VIG is in the S&P.

The "almost" portion of your statement is the entire point, and re-balancing isn't going to cause "every other share price to collapse".
From your statement it seems like you're underestimating it's impact.

Their impact would be felt across the whole market by their sheer valuation - even if you tried to exclude them specifically.

So yeah, if eg ai crashed and took Nvidia, meta, goog or MS for the ride... You'd have massive impacts all across the board, even if you specifically tried to exclude them from your index, just because of how gigantic it's share on the economy is.

But this is purely theoretical. It can only be considered an opinion until something actually happens - because the market has never been in a situation like this before - no matter what some people may claim.

Not just that.

If you have a $10B fund which owns things evenly across the nasdaq, and a new company arrives, you have to buy shares in the new company, which means selling existing shares or getting more funding to balance.

So you buy $1B of SpaceX stock at the IPO price, meaning you have to sell 10% or $1B of existing Nasdaq stock, which (when combined with every other fund) lowers the cost of the other stocks.

If I own stock in everything-but-spacex, then I'm seeing the price collapse because everyone else is selling.

Then if spacex stock collapses to half its initial price, your $1B becomes worth $500m, you get margin called, and you have to sell more stock, pushing the other stocks down, and the problem cascades

I'm not underestimating its impact.

Of course the recession that would likely occur if/when the AI spending merry go round comes to an ends would have a negative impact on the entire economy. In that scenario, would you rather own a stock that's going to zero, or one has taken a hit because of the other company going to zero but still has a viable long term business?

Would you rather have an unusually large concentration in a few very specific companies in your portfolio, or have increased diversity (and therefore lower risk) in this unprecedented scenario?

This is why direct indexing is important. I can simply exclude these tickers. Will it skew it slightly from the index? Sure but I’m ok with that
But he then writes: "I want to be really clear that this is the schematic maximally cynical approach, is not what SpaceX is doing, and is not actually possible."