Thanks for the report.
(hopefully) fixed in version 0.1.2 alpha.
It does seem to be fixed, indeed. Now idiots like me can get stuck without a get out of jail free card. Just a joke, but I would recommend maybe adding some way to automatically process dirt that you chunk out (but still make it so you have to mine ores and all that). It is possible to destroy a save by getting stuck in a hole with a giant block and nowhere to set it down. Example, here - I am not capable of placing down the block where I was, Jumping up and placing it above the world, and it's too big to fit into my backpack. As far as I'm aware, I've softlocked myself. Now, I'm not saying you have to fix it, but it is a possible problem you may not be aware of. Anyways, keep up the good work with the game.
Seems the fact that the player needs an empty hand for a lot of navigation and the fact that the player sometimes gets things stuck in their hand has collided. I don't want a softlock to be this easy.
Part of the design philosophy is to have all crafting, building, etc. be done in the world, not in a menu or inventory.
Being able to destroy blocks (not just pick them up) is a somewhat exclusive ability, currently only possible with the destroyer. I am leaning towards a destruction option since its a punishment for getting in a poorly planned predicament.
Expect something in the next minor content update. For now, the <reduce> cheat should save your saves.
Maybe make it so that the welder/unwelder can destroy those large blocks, but turns it off for a time (so you can't just exploit it to save time). The bigger the block, the longer your welder gets disabled. The only point in destroying blocks is to save time anyways, as far as I know, so if you make not using the destroyer a big time sink, it still makes being stupid a punishment without being exploitable.