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(This wish applies to SSH-2; SSH-1 doesn't provide flow control above TCP's.)
As Peter Gutmann has observed, naive implementations of the SSH-2 sliding window protocol place an arbitrary limit on the throughput of each channel, limiting it to the product of the window size and the round-trip time (the so-called "SSH-2 handbrake"). PuTTY is one such naive implementation (it uses a fixed channel window size of 16k).
The full generality of this problem is addressed in flow-control. A simple approach is possible where a connection only has (and only ever will have) one channel running over it, since in that case PuTTY can open the window fully and leave flow control to TCP.
As something of an aside, it might also be helpful for PuTTY to indicate somehow to the server that it only plans to use a single channel on a connection so that the server can open its window fully too. Otherwise, we only get improved download performance.
PSCP and PSFTP do both of these as of r7679, and get decent download performance.
Audit trail for this semi-bug.