I have been running a pool for years and i have seen people try to do this, but if your league is 12 teams, it should not really matter. The manager in question should not be able to pick up players of any real worth in a league that is that deep. Chances are that he is dropping players that are valuable, and giving the other 11 managers chances to poach some of his good players. so i say, let them shoot themselves in the foot. It's fair game either way, as the option is there for the rest of your managers to do the exact same thing if they wanted to counter it.
If you still wanted to slow him down, change the option for how long the players are on waivers after someone drops them, if you set it higher, he will run out of options sooner, as the Free Agent list thins out even more.
Good advice Stew. Adjusting the waiver further out does seem like the best option for cutting out the crap. You shouldn't be worring about the constant add/dropping if you wanted a head to head competition. That just makes it a rotisserie league.