the problem is not the ability of the editor or the code, it's really a problem of how well you can organise your events. If you end up with hundreds of event sheets, it can become VERY difficult to track down where each bit of code lies, do you really know whether you've caught all references to an object or a variable before you delete it.. etc.
The C2 editor doesn't provide the development support needed to help you with large projects... it does not stop you, but it is limited in the things that help make your life easier. It's one of the reasons for C3 I believe.
If however you can structure you code in such a way that it's pretty much a common core with data for 1000's of levels, then you don't have a problem at all!!! try to keep to good programming practice, and you'll be fine.