Mike, I would actually classify what you're describing as a form of active auditing. You created a log other than the SQL server transaction log.
Yeah, in any sort of active logging, logging too much and not being able to use it for anything is a common problem. As is huge amounts of disk-use.
For what you were doing, preventing code from ever reaching the database in the first place, passive auditing definitely wouldn't do it. Neither would trigger-based SQL auditing. That's when you have to have the front-end or some other tier do the logging for you.
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