Yes, you read that right. Much Different, a Swedish-based, non-profit organisation have given themselves quite the goal. A 1000 player FPS battle, which isn't even a full game, but a browser-based FPS title.
It is called "Man Vs. Machine" and is a game that:
Demonstrates the possibilities of a new kind of technology, developed by MuchDifferent, for creating massive online games. The secret behind being able to handle a much larger amount of players in one First Person Shooter (FPS) battlefield lays in having several (in this case 8) single-threaded servers working together as one, thanks to PikkoServer.
The game is built on the Unity engine, and uses some spiffy server technology that is meant to eliminate lag. Much Different have tested the servers, but just not with the general public yet. Much Different state that:
As long as you have an Internet connection capable of downloading 31 KB/s the amount of lag you experience should mainly depend on your distance from Stockholm, Sweden, rather than the number of players in the game.