There’s currently no implemented limit on the number of taxon rules you can apply to a project, but there is likely functional limit where things start to break and we just haven’t seen it yet. We did have to limit the number of subproject rules an umbrella project can have to 500, and it’s possible there would be problems when there are around that many taxon rules.
I’d also recommend the list approach for this use case. Feel free to try adding that many rules to a project. Perhaps with taxon exclusion filters you can minimize the total number of rules you need to add. In my opinion we’d ideally allow lists as a filter option for collection projects and leave the managing of taxa sets to lists.