It is possible to raise the limit to 128 players. With help from freddy, the BF1942 server code was succesfully changed to accomplish it.
Here are the patched files of Battlefield 1942 server executables for Windows. They include the changes to prevent 2 exploits (game.createLocalPlayer and game.setTeam) and maximum players limit was raised to 128. Included also a patched DedicatedServer.exe so you can easily select up to 128 maximum players.
BF1942 server for Windows v1.61:BF1942_w32ded-1.61-patched.zip
BF1942 server for Windows v1.6:BF1942_w32ded-1.6-patched.zip
There is one problem, when the server has more than 64 players it isn't listed in the in-game Gamespy server list.