According to Peter, it was a speed problem. Since he helped write the software, I'm inclined to take his word for it
If it was a memory problem, then there should still be a limit, it will just be larger.
It should be easy to generate a test epub using a simple script that outputs something like
Code:
<p>
line 1<br/>
line2<br/>
...
</p>
Then just convert it to epub using calibre (with splitting turned off --profile none)