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Cool stuff boys! It would be interesting to compare against kmer matches under Hamming distance. Since your method is specialized for short patterns, maybe kmer under H. dist could give similar results, but hopefully in an even shorter time :)

Didn't look much into implementations yet. FFT is unlikely to be competitive, but O(n*sqrt(m)) is probably not better than O(n*k) either (just the top O(k) rows). There are a few recent papers using SIMD, but for now my feeling is that the bitpacking for edit distance is very competitive.