There will be protection but it will be several hundred amps per phase and good old fuse not a fast acting MCB. You appear to be making wrong assumptions about how power is distributed. As Mr Rumm says in most cases several properties will share the same 230v feed with them evenly spread across the three phases. Great use of diversity is made, each individual house may have a "100A supply", with the service cutout rated at 100A but most of the time they will only be taking 5A or so (1kW), big loads like showers will only be on for (relatively) short times and not at the same time as the other houses. Being rural we have our "own" 11kV to 230v transformer up a pole outside, the fuse on that pole is 200A (or was they recently refurbished the stays and fuse and it's now 20' from the ground instead of the nice handy eight).
current as the substation could put through the wire feeding the house.
Like most fuses a 500A fuse takes a considerable overload (think several times it's rating to blow in anything under a minute. An temporary fault type short on the short on the end of a customers will not be able to sustain the power disipation required (>>100kW) without exploding and reducing the fault current. The substation fuse is to protect the distribution cables from gross faults not individual supplies.
One can't help wondering how the ends of a service become disconnected from the cut out and touch each other without external influence...