A 2.7MB items file from the end of my game contains 7173 entries. Comparing to the file sizes you mentioned, this would imply an item count of about 11,300 and 12,300 respectively. An items.000 file with 10,000 entries would be about 3.7MB.
In the announcement topic for v1.2, DAD said "It handles items.000 files up to 5MB. It allows as much as 10,000 items in a list." (the topics for versions 1.3 and 1.4 do not mention any changes to these limits).
How long did you wait when the program stopped responding? DAD did mention 5MB, so perhaps the program was just taking awhile.
