I still don't see what that has to do with Dreamshell? If you mean the GDEMU, IDE Mod and USB-GDROM or MODE, all of the alternative loading methods then yeah there is at least up to 2gb size images possible. But those still are running either .GDI, .CDI or similar format.
So like what Ian said, there is less of an issue about physical size of the game image, and more about what you can cram into the system memory at a time to run. Like he mentioned it is within the realm of possibility with heavy optimizations. But you would likely need a team of people to handle a project of this scope. Also it would need to be done with the Katana SDK to try and get running as optimally as possible. If people tried to port it with Windows CE it would likely not have half a chance of running well.