The limitations apply to MD3 only. If they are exceeded funny things start to happen depending on the tools used to generate the MD3 data; using Milkshape for example structure outside the 1024 bounds are folded back into valid space, whereas this won't happen using Blender, gmax, 3DS Max - the former (MilkShape) will result in a usable model in terms of it being loadable into game, whereas the latter generally won't, at least not without some error or console warnings.
If models needs to exceed the 1024 bounds it's best to use another format like ASE, or OBJ, FBX (support varies depending in the game and the version of Radiant used). If models need to be large and animated there's generally no option but to use MD3, they will need to be broken down into sensible sections (although this may present synchronisation issues between the different parts).
Building a level in Blender etc., i.e. exporting large level pieces as models rather than 'mapobjects', is subject to the same limitations depending upon the format of choice, ASE can be used without too much issue in most instances (MD3 is impractical for this), the primary concerns are just to make sure the level is sectioned (to account for VIS), and each is centered and properly grid snapped before export.