As you can see from the diagnostics the XML document you are trying to use in YQL is too large (which is why it works fine for 500). We currently have a limit of 1.5Mb for a document.
There are a number of things you could do, but none of them ideal.
The easiest may be to generate multiple XML files for the DB and use more than one table to load the files as needed. For example, try and get all the information for a table into a single XML file. If thats too big you could try and put less information into that file. If THATs too big then you could create ONE file per entity ID in the DB, and another file that is the "index" (and then join either explicitly on the command line in YQL or in another helper table that will merge the results in).
If the DB is pretty "flat" then you could split it across multiple XML files again, and build a table that uses "paging" to load up the right file depending on what page was asked for.