I currently use 72 factions on my own PW. The only issues I've seen is where one faction is allied with another, i.e., attacking one makes another an enemy even if normally indifferent. this seems to persistist across the module even if those other factions weren't spawned in anywhere at the time. I've also noticed that a DM possessing a creature and attacking or being attacked by a PC can force a global effect even if all your factions are set as local.
Other than the above, well thought out factions are pretty fun. Nothing like being low level and fleeing from a troll, only to have some goblins appear and decide they dislike the troll more than they dislike you.
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