I had been talking about this in the RUMOR fourm but now that it isnt a rumor no more, im gona post it here. We where talking about the source engine for modding capabilities and what all that could do. I sent a basic email to some of the guys at valve, and Rick was nice enough to give me the heads up. For those of you planing maps and ideas for your mods, or just wanting to know what the source engine can do... here is what rick sent me.
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While the engine is setup to handle 256 players (was only 64 in HL1), I don't think you'd be successful running that many, you might be fine running 128, you'd have to test it. The reason is CPU and bandwidth. With a single server handling all of the transactions at the speed at which they need to happen, there may just simply not be enough horsepower to handle that many players.
Rick
Valve
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While the engine is setup to handle 256 players (was only 64 in HL1), I don't think you'd be successful running that many, you might be fine running 128, you'd have to test it. The reason is CPU and bandwidth. With a single server handling all of the transactions at the speed at which they need to happen, there may just simply not be enough horsepower to handle that many players.
Rick
Valve