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[This comment does not offer any answers to Chris Rowley's request for
float-placement algorithms, but it does document some extensive user
experience.]

I deal with many users in a Mathematics Department.  They (and I)
write technical reports, journal articles, book chapters, books, and
theses.  The biggest complaint that I get about float placement is the
difficulty in making the float appear near the point of reference.  It
is not uncommon to see floats move all the way to the end of the
section or chapter.  The ! (exclamation) option in LaTeX-2e helped
this, but didn't completely solve the problem.

What users expect is something like an exponentially weighted
placement algorithm: if the float moves n pages ahead, then it
should do so with probability x^{-n}, where x is about 100.

The floats I'm concerned about are not ones with funny parshapes, or
cutouts with text flowing around them: they are simple rectangles of
width \textwith, and variable height, usually 10% to 60% of \textheight.

Our University of Utah Thesis Office makes life even harder in
demanding that floats follow these rules (recorded in our thesis LaTeX
style file):

% Figures may appear physically after a reference at the bottom of
% the same page or the top of the next page. Figures deferred to the
% next page must all appear at once, producing a page of floats if necessary.
%
% To avoid a single figure centered on a float page the [t] option can be
% applied to the last figure in a list.

These are braindead and stupid rules, but we have been unable to get
the people responsible replaced with new personnel who known something

Thus, the t placement option, defined on p. 197 of the LaTeX User's
Guide and Reference Manual, second edition, as

t   \emph{Top}: at the top of a text page

doesn't satisfy this requirement, because it could (sensibly) place
the float on the current page, before the reference to it.

While the p option avoids the placement problem, it is only useful if
the floats are large enough to force a new page almost immediately.

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