Yes, it have approx 200-300MB index files in my Kindle 2.
I don't know - maybe Calibre can do reindexing at the PC side and then put indexes to the Kindle? I hate Calibre to touch my Kindles so I can't verify this. I use Calibre always offline (not connected to my Kindle).
If the reindexing is causing Kindle unstability it means that this is either poorly written software (I am a software engineer and University teacher of programming) or in some Kindles it is bad or broken NAND chips - making kernel panic or hardware error in heavy use. All is due to the reason to keep the price low (manufacturing price, not retail price). If they had put more RAM and put some fast SLC NAND for virtual memory or system partition - it will be ok, but will be more expensive. This is a general problem with all new embedded devices. In my practice I once had the embedded device (made by company I work as a consultant) that uses cheap MLC NAND but the firmware writes every 100ms or 1s the clock state and after an year a whole bunch of installed devices are blown and had to be replaced. Then we changed the firmware not to write such often to the NAND. Reindexing, keeping in mind that Kindles have too small amount of RAM and slow NAND, is heavy job for the Kindle's hardware.