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512MB RAM should be plenty, (although it probably applies the same rules on Kobos that only have 256M)
It could be disabled for no other reason that no one expected a genuine text file of this size. If you create a 100MB .txt file and try to load it into a regular editor, that will usually slow down considerably as well. So a limit might not be wrong but which limit do you pick?
Depending on how it calculates pagination that could be very expensive for a large file...
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