I just sent this question to Matthias Clasen, who increased that
number
from 4096 back in 2002. It seems that a pixbuf sets an arbitrary size
limit on how much data can be loaded in a single chunk. The real
question is whether that limit is intentional or merely a bug.
Meanwhile, Brian Downing posted a patch to the pan bugreport:
http://bugzilla.gnome.org/attachment.cgi?id=96917&action=view
His patch explicitly limits the amount of data Pan sends in one
chunk, and this is the correct fix at least until we know if this
size problem is a gdk bug or not.