I
think (very timidly) that it's not so much an issue of distance but an issue of "number of chunks with billboards". Chunks are however ordered by distance, hence the impression that there is a limit on distance.
-IF- what I'm saying is right, you can find the relevant code in engine/.../rendering/world/RenderableWorldImpl.java.
In particular, check out the use of the static final variable MAX_BILLBOARD_CHUNKS, currently set at 64.
Also be aware that there is plenty of current work being done in that area of the codebase, with pending
PR 1459 and more PRs to follow.