IMHO it's perfectly reasonable to expect sequence/replicateM/mapM to be able to handle a list of ~1e6 elements in the Unescapable Monad (i.e. IO). All the alternate implementations in the world won't be as handy as Prelude.sequence, and no amount of documentation will prevent people from running into this headlong*. So unless there's a downside to upping the stack size limitation I'm unaware of, +1 to that suggestion from me.
John
[1] Most people are physically incapable of reading documents that explain why what they want to do won't work. Even if people did read the documentation, I suspect that the people most in need of the information would be the least likely to understand how it applies to their situation.