Anonymous guest,
the 16K limit is only for drawing stars.
Guest billc,
How did you determine that you couldn't see galaxies beyond 1.25e7 ly?
The "galaxies_extended.dsc" addon defines galaxies more distant than that. NGC 5839 is at a distance of 7.6e7 ly, for example. I have no trouble seeing it on my system. The "galaxy_clusters.dsc" addon includes clusters of galaxies at distances greater than 3e9 ly. I have no problems seeing the blob representing the cluster A895 at 3.887e9 ly, either telescopically or by going there.
These catalog files are available in
http://www.lns.cornell.edu/~seb/celestia/galaxies.zip
added slightly later:
3DS models of galaxies can be seen at greater distances, too. There's a crude model of NGC4622 available in
http://www.lns.cornell.edu/~seb/celestia/ngc4622-4.zip. Its DSC file places it at a distance of 111e6, which is the same as 1.11e8. It's quite visible on my system, else I would have screamed about it long ago.