You are correct, if you enter hotmail.com in the blocked senders list it will block all mail from any hotmail account. If your blocked address list is full (250) and you can not remove any or condense them with the domain then you will have to find another solution for filtering junk mail.

If you are considering switching to another or additional email service, like gmail or yahoo, you can export your contacts from hotmail to a CSV file then import them into the new email provider.