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Yuichiro Fujiwara
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So I read your edit, and here's the answer: Yes. Infinitely many of them exist. But the construction is so obvious that I still kind of feel like you have other conditions.

Anyway, if you only need a $2$-design with $r = \lambda^2$ which has at least one pair of blocks intersecting each other, then you can simply copy a Steiner $2$-design. Take an $S(2,k,v)$ (i.e., a Steiner $2$-design of order $v$ and block size $k$, which exist for infinitely many pairs of $v$ and $k$). Then its repetition number $r$ is exactly $r = \frac{v-1}{k-1}$. Since it's a Steiner $2$-design, its index $\lambda$ is one. If you make a copy of this design $r = \frac{v-1}{k-1}$ times, then what you get is a $2$-design of order $v$, block size $k$, index $\frac{v-1}{k-1}$, and repetition number $(\frac{v-1}{k-1})^2$.

To make the above trivial method even more trivial, here's an example: Take the Fano plane. It's the unique $S(2,3,7)$. Copy this guy $3$ times. Then you get the $2$-$(7,3,3)$ design you mentioned in your question. Why we copied $3$ times is because it's $\frac{v-1}{k-1}=\frac{6}{2}=3$. So, for example, because an $S(2,3,v)$ exists for all $v \equiv 1, 3 \pmod{6}$, you can have infinitely many examples of what you want by pasting the same $S(2,3,v)$ $\frac{v-1}{2}$ times.

Yuichiro Fujiwara
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