As far as I know, there is no size limit.
RM just stores a pointer to the actual file. The picture that is displayed within the program itself is only a thumbnail version of the original file. I regularly link photos that are 4,000 by 4,000 pixels.
I also have my RM Media in 2 or 3 folders. So, I can just point the Media files to those locations? Correct? And, Does it create its own thumbnails?