As far as I know, application variables can store any amount up to the memory limit of the server.
Oh, when you reboot your server, the very first page load takes forever, if you are populating a lot of application variables, this is something to keep in mind also.
I'd be interested to know what you find out...
I have been archiving and 'compact and repair' every 2-3 weeks or so to get the data accessed faster on my intranet site. I have a script that automatically deletes and/or archives (into another db) old data.
Although, I really wish I'd suck it up and just convert over to a real db, but who has the time? I am too busy maintaining my Access db to be bothered with that.