The Brompton luggage block is the gold standard for good reason, to the point that some people fit them to non-Brompton bikes.
Rear-rack-wise, I used one of those over-the-top style pannier things on my 20"-wheeled folding BSO. Worked fine (no heel strike because flat pedals), with the occasional wheelie. I've experimentally tried fitting my Ortlieb Front-Rollers to the rear rack on my Brompton, but it isn't really a practical option.
I have used a Carradice racktop bag with the Brompton rear rack, which works fine. Radical make a larger capacity racktop bag for the purpose. But Brompton rear racks aren't a particularly convenient way to carry luggage, as it defeats the partial-fold-as-kickstand function, and adds faff. They're best regarded as a way of adding stability when folded and protecting the rear mudguard, that can be used to carry additional stuff on special occasions. (No problem bungeeing on a big pack of loo roll on the way home from a shop, for example.)
A bit of a tourist thing, but you can hang a rucksack behind the saddle, with the rear rack supporting most of the weight. Add toe-straps or velcro for stability to taste.