I find this very interesting too. I felt a lot of pressure to add AUTH, did so, and realized no one else really supports it. So people are paying for private relays but unable to use them?

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Yes, unknowingly too.

FYI: coracle upon connection instantly sends two REQ's:

["REQ", "REQ-82764758", {kinds: [1], since: 1681967605}]

and

["REQ", "REQ-81775670", {kinds: [1], since: 1681946005, until: 1681967605, limit: 20}]

To which an NIP-42 AUTH requiring server sends back 2 NOTICE's of failure (even though the server sent an AUTH challenge upon connect)

It responds to the AUTH challenge properly though.

The client should probably first use NIP-11 to get the supported NIPs - see that it supports 42, and then expect an AUTH challenge?

Nostr not having formal client initiated connect/auth makes this a little awkward.

Yes it makes this very awkward. There is also nothing in the NIP to tell clients or relays how to address the “lost” REQs in this race condition.

#[4]​ and I petitioned for an optional auth header on connect to make the flow much easier for private relays. It was rejected pretty aggressively and we were told NIP-42 is easy and clear. 🤷‍♂️