I see myself potentially running into this limit from using watched words to combat repetitive spam, and had some thoughts about what might be useful in the future to others, if not to the OP.
A way to deal with this without any code change is to change to Using Regex with Watched Words and combine many words into a single regex. It is easy to get wrong if you aren’t familiar with regular expressions, but it’s technically feasible. (This is the direction I am likely to go, because I know regular expressions.)
Additionally, I would expect that there are two ways to write a plugin here.
The reason for the 2000 limit is that the algorithm doesn’t scale very well and is run synchronously, but it’s an arbitrary limit. I would expect that a simple plugin could monkey-patch the 2000-word limit to accept the performance hit. But I wouldn’t do that for 10000 entries, myself!
The other, possibly complementary, approach would be to have a separate list specifically for flagging, and to do that asynchronously from a sidekiq job that is fired off for each post create/edit.