Smallest Transit MTU

[Jerry Pasker <info () n-connect net>]

Operational comment, question:

I've learned that having an MTU smaller than 1500 bytes is  a bad 
thing. When encountering networks with MTUs smaller than 1500 bytes, 
path MTU discovery breaks when sites like a computer science college 
my friend is going to .edu, a certain 'us' online bank.com, and the 
worlds most popular auction site.com block all icmp, including the 
icmp "fragmentation needed but DF bit set" packets.   Despite what 
the RFCs say, the transit internet, in my opinion, generally needs to 
accept and transit packets up to 1500 bytes without packet 
fragmentation.

Is this consistent with what everyone else's operational experiences?

Is there an RFC that clearly states: "The internet needs to transit 
1500 byte packets without fragmentation."??