FAT32 should be able to handle many files - maybe not all in one folder, not sure.
Still, that's a lot of books. Perhaps Koreader or Coolreader would handle it better. If you go by folder structure, there is no need for any database at all.
You should create a new thread for this problem. And perhaps check the SQLite database out to find out what is making it so huge. You can install SQLite related programs on PC as well.
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