Could you add an option to reduce merged chests capacity and/or add a cap to capacity?

Main reason for this is game performance - with very big inventories inserting into them will slow down the game considerably.
I find this mod very useful for train resource management but having them go beyond 100's of slots might get performance costly.

To test this take a look at entity update when having a lot of inserters working with big full chest. With very big ones (like 1k slots or more) it might be visible even with one chest.

See 1.6.0 release. Beware, when you reduce chest size items outsize of new size will be destroyed.