How to increase the limit of number of web parts that is in Add Web Part dialog inside the Web Part Gallery? The current limit is 500.
This is an interesting issue and obviously occurs due to some of the many built-in limits of SharePoint. However, which one?
The only fitting one I could come across was the following
Limit: Number of apps in the corporate catalog viewable by a single user
Maximum value: 500
Limit type: Boundary
Notes: When more than 500 apps from the corporate catalog are available to a single user, that user will no longer see any apps in the default Add an App view. Instead, a message guiding you to search the app catalog or the SharePoint Store will appear.
However, this description is for SharePoint 2013. Essentially though 2010's web parts showing in the web part gallery in a way correspond to 2013's apps and assuming their limitations would be the same, then it would be this rule causing the issue. By looking at 2010's limitation documentation, this hasn't been specified at all (e.g. here)
With the above information available, it doesn't seem to be possible to increase the limit.