I have that problem too. I have a terrain that is 120,000 verts which I reduced to about 60,000 using Bryce 5. My texture, however is 1024 x 1024. If not for that, my terrain would look crappy. I think that 65,000 is the limit per model, but I heard that HMP files can be much bigger. I could be wrong, as I've not yet figured out how to convert a 3DS model into a terrain or a altitude mask into a height map.

Not sure if this helps, but I thought I would just share your max vert limit woes.