Nothing is broken (EDIT: Well, I don't think *this* is broken). That is and has always been the maximum number of editor vertices in a single object.
You need to distinguish between editor object and output object. Output objects are limited to 65536 (or maybe 65535 - can't remember) vertices.
A single editor object's output object can, however, reach up to that maximum because any vertex may be reflected, or duplicated multiple times.
Take for instance a cube made in the LFS editor. It may have only 4 editor vertices, which are mirrored to what may appear to be 8 vertices in the output object. But actually, each corner of that cube has 3 faces there with a different normal, so at each corner there are really 3 vertices. So an *output* cube really has 24 vertices (4 corners per face times 6 faces OR 8 corners times 3 normals per corner) and this is the same with any object submitted to a graphics card, no matter which software you use. So, regarding output meshes, a cube has 24 vertices, even though as an LFS editor object it will have only between 4 and 8 editor vertices.
The LFS number of editor vertices is necessarily limited to 32768, because each vertex of a triangle can refer to either a point index (from 0 to 32767) and that may be reflected - in which case the top bit is set (e.g. triangle referring to point '32768' is referring to the reflected copy of point 0 and '32769' is really referring to the reflected copy of point 1. This is the maximum that can fit into a 16-byte integer and that is the way it is coded at the moment, without any prospect of increase in the near future.
So... no, I wouldn't say you are being slow, you're just not quite up to speed yet!
EDIT: The difference between Blender export and LFS import number of vertices, may be different due to the normals as mentioned above. LFS importer duplicates points where they have multiple normals, then it assigns smoothing groups through a complicated algorithm and then eliminates duplicate editor points, so the resulting number of points can be different from that appearing to be exported from Blender. If you want to really understand it you could try with some simple objects like a cube, etc. to see what happens.
You need to distinguish between editor object and output object. Output objects are limited to 65536 (or maybe 65535 - can't remember) vertices.
A single editor object's output object can, however, reach up to that maximum because any vertex may be reflected, or duplicated multiple times.
Take for instance a cube made in the LFS editor. It may have only 4 editor vertices, which are mirrored to what may appear to be 8 vertices in the output object. But actually, each corner of that cube has 3 faces there with a different normal, so at each corner there are really 3 vertices. So an *output* cube really has 24 vertices (4 corners per face times 6 faces OR 8 corners times 3 normals per corner) and this is the same with any object submitted to a graphics card, no matter which software you use. So, regarding output meshes, a cube has 24 vertices, even though as an LFS editor object it will have only between 4 and 8 editor vertices.
The LFS number of editor vertices is necessarily limited to 32768, because each vertex of a triangle can refer to either a point index (from 0 to 32767) and that may be reflected - in which case the top bit is set (e.g. triangle referring to point '32768' is referring to the reflected copy of point 0 and '32769' is really referring to the reflected copy of point 1. This is the maximum that can fit into a 16-byte integer and that is the way it is coded at the moment, without any prospect of increase in the near future.
So... no, I wouldn't say you are being slow, you're just not quite up to speed yet!
EDIT: The difference between Blender export and LFS import number of vertices, may be different due to the normals as mentioned above. LFS importer duplicates points where they have multiple normals, then it assigns smoothing groups through a complicated algorithm and then eliminates duplicate editor points, so the resulting number of points can be different from that appearing to be exported from Blender. If you want to really understand it you could try with some simple objects like a cube, etc. to see what happens.
thx!