Dnn natively (like any asp.net app) does not support large file upload; you can modify web.config but you will have a lot of problems on ram consumption, client timeouts, and so on.
We have spent very long time in studing all the various technical solutions for large file upload particularly for avoiding timeout on client browser and for avoiding server ram usage.
Our conclusion was that we need third party components like NeatUpload (free) or Telerik Upload; we used NeatUpload but it's very nice and powerful also Telerik.
We have developed a DNN PA module for our customers that is bases on database blob field for storing files and you can virtually upload up to 2 GB files as single file (I never tried upload bigger than 200Mb).
If you want to have a look to our module go here:
http://www.internetdisc.it (sorry it has only italian language), to log in use these username: demoInternetDisc password: demo; quota for demo is limited to 500Kb
To upload you must have pop-up enabled, then click on any folder on the left tree and then click on the blue-arrow icon. It will open a popup where you can browse your file, you can insert an email address which receive a message when upload is finished and an upload progress bar.
So my contribution is: yes, it is possible to upload large files in dnn but actually we need third party components; so for DNN future development strategy a large-file-upload provider would be a great idea.
Anyway, if someone is interested in building a file manager I suggest to start having a look at Telerik open source projects. They have built a file manager example using Telerik components; it's very interesting because it saves files on phisical file system and has large upload functionality (and if I remember it uses also ajax).
It should be very easy to convert it to a DNN module.
bye
Luca