Technically, it's not an LPFM. It's a translator for KTNR 92.1 in Kenedy, and it's licensed to Hollywood Park. The reason I point out that it's a translator is because translators don't have to follow the same rules LPFM's do; the rules are much stricter for LPFM's. Acceptable spacing for a translator is based on signal contours rather than distance from other stations. As KLBJ-FM doesn't technically put a usable signal into San Antonio, it's probably legal. To answer your other question, we're definitely likely to see more translators close to licensed stations as the "Great Translator Invasion" still hasn't been completely sorted out. I'm not sure what the legislation on LPFM's is or how it will turn out.
I remember a translator in the Knoxville, TN area that had too strong of a signal inside WIVK's primary signal contour but was permitted anyway since it established that no one lived in the area of interference. I believe it also argued that it was a secondary service and could be forced off-air or relocated if it did cause unacceptable interference to WIVK. As far as I know, it's still on-air.