You learn something new every day... Site Template Max Limit Increased to 500MB
I had a thread with DWinter an important support figure in SharePoint Land. He explained that although site templates do still have the default limit of 10MB, there is a way to change it!!!
Dan explains that it is the default, but you can change it from the stsadm command line tool [Here's an example of how to set it to 20MB]:
stsadm -o setproperty -pn max-template-document-size -pv 20000000
(Where max-template-document-size is in Bytes)
You're probably wondering why this is cool. Maybe not? Imagine building your best practice site template that has all your cool content types, workflows, master pages, and the big one... including site templates (like the fab 40). This would allow you to really beef up your site collections to have those key governance features you've wanted to include...
<Update>
Thanks Mike Walsh
WSS v3 FAQ (created 27th June 2006 last amended 4th November 2006)
Limits: Is there still a 10MB limit for templates?
</Update>
There aparently is a bug with large site templates during the restore process the backup may not fail, but the restore may. I recommend 24MB as your top limit to keep it under the FWP classic top limit. You might be ok at just under 40MB, but I wouldn't push it unless you plan to really test it from end to end which you should do anyway.