This is a very custom rendering procedure. I doubt gamestudio could handle these amount of blocks with the standard system.
Why shouldn't it be possible with gamestudio? How much blocks are visible at once? What's your guess? Calculating visibility of such equal sided blocks should be easy. The blocks don't need to be an entity at all, a simple array with position vector and texture number is sufficient. Bunchs of blocks in the distance could be visualized by a single model with its vertices placed by vec_for_vertex. The blocks around the player are represented by a set of - let's say - 50 blocks that are placed like you would place gras in a common level.
