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Well I didn't tested it with the template version itself but I applied stencil shadows once on a model of +- 10000 polies and the fps went down from 60 to 3-4 fps ... That is my experience about it 
Cheers
Frazzle
Yes, that happens. Gamestudio uses the same model with all 10,000 polies for the shadow then. But you can create a LOD version of this model. The shadow algorhithm will use the next LOD stage for the shadow und thus you can can make it faster. A shadow never ever needs 10,000 polies 
But nevertheless the real-time shadow will not work with trees and foliage since it does not resprect the transparent parts of the textures.
So you better use static shadows on terrain.
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