This is definitely not a bug as oposed to a glitch in how you are adding users, and/or calling the parent NetInfo domain.
If you want to allow universal access to systems in your network by anyone, then you need to add all your users to the parent domain, not the local domain. You cshould, under NetInfo Domain Setup, an included app, be setting this computer "is a NetInfo Parent" and find NetInfo parent "via static IP". Then enter the IP address for the Server you are using and the name of the parent domain on it (the default is Network).
Once those settings take effect, you can log in through the Server Admin app, and when you do an add user you will be presented with two choices, either the local domain or the root domain. You ant the root domain. Then you can go ahead and add your 500 users. You could also do this through the Manager app, but I really find that a bit obtrusive as I haven't readily used it. Also, don't forget that if you want to setup your users to have access from any machine in your network, then you'll have to fiddle with the mount options for universally accessible User directories off the Server.
Once this is done, you simply go into Directory Setup on each of your client machines and Configure NetInfo to look for a Parent at the Server's IP with a name of "Network" or whatever else you called it.
Ciao!