C# compiler bomb

Following on from my C# "Hello World!" obfuscation answer, I found an interesting Q&A in the same forum:

Challenge

Write some source code which occupies 512 bytes or less and which compiles into a file which occupies the most possible space. Largest output file wins!

Vladimir Reshetnikov came up with an amazing answer using C# that's worth reproducing here. Note that each extra .Y in the source makes the resulting binary exponentially bigger: