So last night (8/27) i was finally able to get into the game at 11 pm and several others in my FC were actually able to get in as well. It turns out we were able to get into the game finally because people were actually logging out because of a maintenance window that was announced and there was not point in staying on AFK as they would get booted anyway.
This just goes to show that yes staying in the game AFK does prevent other people from playing.
As far as spamming the logon on button it is a bit different for PS3 users (or at least me). After hitting start it takes approximately 5-7 seconds for my character to load. So in total it takes about 10 seconds from the point of getting Server Full message to actually try and logon again.