Using AUCTeX, which marks up section titles (and other text) using  
larger-than-normal letters, I regularly get horribly wrong word  
wrapping (see attached screenshot).

I use longlines-mode and have `longlines-wrap-follows-window-size' set  
to t, which, according to the doc string, means that "Non-nil means  
wrapping and filling happen at the edge of the window".

I won't explain further, because it should be clear why this occurs.  
Longlines wraps lines before (window-width) and that's a conceptual  
mistake in times of variable-width fonts and syntax highlighting.

PS.: Apologies if I have reported this before - I can't remember and  
nothing (like display-time word wrapping) has been done in that respect.