proxy_buffering off causes truncated responses when backend emits response in small chunks

[W. Andrew Loe III]

We use nginx as both a load-balancer and webserver. This issue is with the
nginx functioning as a load-balancer.

We reverse proxy to 6 nginx webservers running a number of Unicorn (Rails)
application servers, these webserver nginx instances also run Evan Miller's
mod_zip to assemble archives on the fly. We have discovered under certain
circumstances the load-balancing nginx will "hang-up" on the webserver if
the load-balancer is configured with proxy_buffering off, however
proxy_buffering on seems to succeed. We would prefer to run without
proxy_buffering to prevent the load-balancer's local storage from being
overrun.

Our default setup uses nginx 0.7.65 for both the load-balancer and the
webserver, however switching to using 1.0.12 as the load-balancer has the
same problem. We have experimented with different software doing the
load-balancing and it does not exhibit this issue.

I've have linked the nginx configuration file we're using on the load
balancer, and debug logs for both 0.7.65 and 1.0.12.

https://x.onehub.com/transfers/sg32zsar

The buffering on log is very long, but it does show success of a 4.8GB
response, the other responses always fail at the same point (826 MB).

The client sees the following (in access.log):

$ curl -b cookie.txt -o US.zip https://mydomain.com/folders/7816672/archive
  % Total    % Received % Xferd  Average Speed   Time    Time     Time
 Current
                                 Dload  Upload   Total   Spent    Left
 Speed
 16 4922M   16  826M    0     0  1906k      0  0:44:03  0:07:23  0:36:40
1075k
curl: (18) transfer closed with 4294967296 bytes remaining to read

The nginx instance serving as the webserver logs:
Feb 07 15:03:39 ip-10-2-185-35 error.log:  2012/02/07 23:03:39 [info]
21425#0: *16656299 client closed prematurely connection, so upstream
connection is closed too (104: Connection reset by peer) while reading
upstream, client: 10.254.174.80, server: mydomain.com, request: "GET
/folders/7816672/archive HTTP/1.0", subrequest: "/s3/asset-27235062",
upstream: "
http://72.21.215.100:80/bucket/asset-27235062?AWSAccessKeyId=key&Expires=1328741778&Signature=signature<http://72.21.215.100/bucket/asset-27235062?AWSAccessKeyId=key&Expires=1328741778&Signature=signature>",
host: "mydomain.com"
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