I was thinking about this the other night, and a new possibility occured to me. Instead of that silly codename theory, how about the other side of the coin? In DAF, we're shown that Bofeld has perfect duplicates of himself for the purposes of confusing and evading enemy operatives. Who's to say that the Blofeld Bond encountered in OHMSS is indeed the same man he met in YOLT? This would explain why this Blofeld didn't recognize Bond. In my mind the scenario plays out like this:
Blofeld - the original Blofeld - founds SPECTRE. He serves as their Number One for many years. This Blofeld is the one seen in FRWL, Thunderball, and YOLT. His ultimate goal is wold domination. He alters his appearance from time to time to help avoid identification. He eventually takes this to the extreme of training and surgically altering perfect duplicates. These are, for the most part, well paid lackeys that are content in living the high life of SPCTRE leadership without having any real responsibilities other than parroting the real one's directives. That is, until the events of YOLT and the subsequent hunt for Blofeld, Operation Bedlam.
One of the duplicates - we'll call him Blofeld-B for simplicity - is craftier than the rest. While the original Blofeld is in hiding (and seeking out hair replacement), this one assumes his identity, and uses the remaining SPECTRE resources at his disposal to set up shop in Piz Gloria. Of course, this one isn't interested in world domination. Being targeted for capture or assasination by the western intelligence agencies is more than he bargained for. That's why his goal is amnesty. He wants out - the convenient life of a count and a clean slate. Surely he'd been briefed about James Bond as a major SPECTRE adversary, but had never met him face to face and was unaware of his appearance. That's why he needed to rely on the holes in his Hilary Bray cover to identify him. OHMSS plays out as we all know.
The Blofeld in DAF - at least, the main one who impersonates Willard Whyte - is the original Blofeld. This man would never dream of retirement - not when there's death satellite ransoms to collect! Cue anticlimactic sub crane death.
Fast forward to FYEO. We've got a wheelchair-bound bald Blofeld in a neck brace. This is Blofeld-B. He never recovered from his neck injuries sustained in the bobsled chase. Dissapointed with Irma Bunt's marksmanship, he's spent the last decade or so trying to get revenge on Bond. Again, unlike his world-ransoming counterpart, this one is more interested in personal matters. If he couldn't have his freedom, he'd get his revenge.
Now, this is all silly conjecture on my part - there's no way the writers intended things to be interpreted this way. But it's a convenient enough way to reconcile Blofeld's inability to identify Bond, as well as the two onscreen deaths of the same character.
Never heard this theory before, but I like it a lot. I can actually buy into this one!
(Yes, I know the intention of the writers wasn't this, but w/e 
)
