Proper Ways to Dispose of Spam?

An anonymous reader asks: "My domain name is being stolen by spammers; they forge outgoing mail using my poor innocent domain name. First, I'd like to plead with mail server administrators out there: please REJECT spam and undeliverable mail. If you reject instead of bouncing then legitimate mail senders will still know there is a problem. Second, do you have any tips for dealing with a flood of spam bounces? Exim is pitching the bounces pretty quickly, but my server is still getting overwhelmed." In the case of stolen sender addresses, SPF attempts to address this problem but has it been effective?