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Hasnt crashed, tho it has lagged some. With 1000's of players in a small part of the map, with 1000's of spawned grobolds (thanks ashen), I was able to move and kill them (tho some people were not able to.. thats alot of pologons at each hamlet).
The server engine is doing very well, i could imagine the hell other games would have with that amount of players. Its like 1000 players vs 1000 guards at a relic raid in DAoC.. well except 700 of thoes players would be teleported away (or the server would crash).