I don't know about the attack, but one thing you could do to keep your webserver running is to reduce the size of your 404 page to a very simple:

Yeah, but if he's getting enough of them, even with a 0 length 404 response body, I could see the overhead of the underlying HTTP and TCP traffic filling up a DSL line. Once his upload bandwidth is filled up with all that junk, the download bandwidth gets starved.