You're very nearly there, but it's possible that you've been cargo-culting someone else's work, possibly on ssh rate-limiting, without really understanding it. Please note that I'm not criticising you: building on other people's work is an excellent idea in the free software community; but you should understand why they've done what they've done, so you don't fail to use it correctly.
I set up a test rig, using nc (netcat) to flood UDP traffic from a machine called bill to a machine called risby with the following lines:
risby% nc -l -u 12345
bill% seq 1 10000000 | nc -u risby 12345
This produced a very-rapidly increasing list of numbers from risby's netcat, much like the command-flooding you've been having.
But when I created two new rules for risby's iptables which filtered only UDP traffic to port 12345 without regard for state, it worked fine:
iptables -I INPUT 1 -p udp --dport 12345 -m recent --set --name ddos
iptables -I INPUT 2 -p udp --dport 12345 -m recent --rcheck --seconds 1 --hitcount 5 --name ddos -j DROP
When I re-ran the netcats, the first few packets from bill got through on risby, and the numbers climbed rapidly to about 1800, but then it stalled completely and no further traffic was received from bill.
Note that it's quite important that these rules come early in your iptables INPUT chain, which is why I've inserted them at lines 1 and 2 respectively.
Edit:
Increase the rate, and require it to be sustained for longer; perhaps --seconds 10 --hitcount 50? Eventually you'll reach a threshold where few legitimate clients are affected, but the DDoS is still substantially throttled. Note that friendly-fire is always a possibility in this kind of layer-3 throttling; my own ssh server limits new connections to two per 60s window, which makes repeated scps quite slow. But it's a price I'm willing to pay, and to do better requires layer-4 throttling, which means the application has to be throttling-aware. iptables can't help you there.
I note that --hitcount can take no value higher than the ip_pkt_list_tot parameter of the xt_recent kernel module, and if the value's exceeded an error is thrown at rule-creation time:
[root@risby scratch]# iptables -A INPUT -p udp -m recent --rcheck --seconds 1 --hitcount 50 --name ddos -j DROP
iptables: Invalid argument. Run `dmesg' for more information.
But this value can be set at up to 255 at module insertion time. Following the suggestions in this blog entry, it's possible to reload the module, setting the parameter explicitly:
[root@risby scratch]# rmmod xt_recent
[root@risby scratch]# modprobe xt_recent ip_pkt_list_tot=100
[root@risby scratch]# iptables -A INPUT -p udp -m recent --rcheck --seconds 1 --hitcount 50 --name ddos -j DROP
[root@risby scratch]#
Note how the --hitcount 50 no longer causes errors. You may need to flush the INPUT chain (iptables -F INPUT) and any other chains that use the recent module before you can remove and reinsert the xt_recent module.
Best Answer
Since both Snort and Iptables getting the packets from interface so both will process the packets and both will trigger the action which is given by you in the rule. There is no need to use Iptables if you are running Snort. Create a rule for Snort which you have configured Iptables and set the rule action Drop in Snort rule. It will do the same work as iptables. Since you are analyzing the traffic inline so you have compile the snort with nfq(netfilter queue). In inline mode snort will take the packets from the queue.