I have it set to 3500.
is it just my imagination, or do speeds slow down if I set it higher?

I have only 2000.
It usually reaches ~2500, because I permit friends and other clients to enter the queue for powershared files.

sounds interesting. what client is it that has that nice feature?

TBH had it for sure, and it was present in a few other clients in the past. I've been using MorphXT for about a month or two and it seems to be doing the same, although I didn't turn anything on, at least not on purpose, and I can't find any option to control it. It has a lot of strange options though that I was too lazy to analyze, so I must have switched something on accidentally... I am sure it wasn't behaving like this when I first installed it.

ZZUL has a similar option inbuilt for sure, it's controlled by automatically assigned hard and soft limit, and once it reaches the soft limit, it starts selecting the clients more carefully, giving prio to friendslots, then powerhares etc. Many mods have adopted this feature directly from ZZUL (Pawcio, I'm not sure about Sivka and a few other mods). It seems that this option is taking lead because recently I haven't seen in the new mods any option to control this directly, so probably with my next client I'm going to set my limit to 2500 and see if it exceeds this number; if it does, then I'm going to decrease the queue limit, if not, it means that's the hard limit and no more clients above 2500 are allowed.

My MorphXT has this feature integrated too, but for some reason it exceeds the queue by ~20%...

Or peraps it's just broken...

1000, cause I use a p2-450 for file sharing and downloads.

ahhh! I just found the option in my settings:
'Allow Waiting Cue Overflow'
And you can select it for 'Release Files' 'Valid Sources' 'Friends'

What's meant by 'valid sources'?

infinite. That way anyone can get into and jump up and grab a file i'm powersharing, and not wait behind some person grabbing some .sharereactor.ed2kfiles.shareconnector.etc. file

Let me know when you find out.