Unfortunately, there is a hard limit on the size of rules which clients can upload to the Exchange Server.

This limit has been made more critical by the increase in individual rule sizes in Outlook 2003 to accommodate Unicode text in the rules.

Currently, due to RPC communication limits, Microsoft does not plan to expand the size limit. The following information describes ways to reduce the size of rules as much as possible in order to fit more rules in on your mailbox: 

Microsoft Exchange Server has a maximum limit of 32 kilobytes (KB) for storage of rules. Rules vary in size, but some rules can be significantly larger when they involve multiple recipients in a forward action. Each recipient can add up to 500 bytes to the size of the rule. As a rough estimate, the simplest rules take from 200 to 500 bytes. Rules involving recipients add approximately 500 bytes per recipient. A rule that forwards a message to five recipients can be over 3 KB in size. 

Also rules addressing recipients by full display names along with email addresses use up rule space (i.e. Jack Jones (j.jones@jones.net) is better referenced as simply j.jones@jones.net).

When rules involve several recipients, it is best to create a distribution list and use the distribution list as the recipient. This allows more rules to be created before reaching the 32 KB rule limit. Personal distribution lists are not allowed in rules; only administrative lists defined on the organizational level may be used. 

Microsoft has also provided some workarounds for this in the following knowledgebase article: http://support.microsoft.com/?kbid=886616