What do you mean by "stop readning"? Oh, you just stop checking if anything is ready for reading. I see. Well, this is rude flow control I'd say. Proxied server could unexpectedly drop connection because it would think Nginx is dead.

There is a nice feature I don't remember how exactly it's called when some content could be buffered on Nginx (in proxy mode) and there is strict limit of how much could be buffered and when it goes to file. This is what could be used for that case. If buffer overflow happens close client, abort backend, drop records for that request. Keep connection and keep receiving and de-multiplexing records for good requests.