Unreasonable for a single dev to have the entire repo? I'm looking at a repo with ~10 million LoC and ~1.4 million commits. I have 74 different branches checked out right now. Hard drives are cheap.
Code refactors are impossible? I reviewed two of those this morning. They're essentially a non-event. I'm not sure what to make of the merge issue - does code review have to start over after a merge? That seems like a deep issue in your code review process. The service-oriented point seems like a non-sequitur, unless you're telling me I'm supposed to have a service for, say, my queue implementation or time library.
The VCS scalability issue is the only real downside I see here. And it is real, but it also seems worth it. It helps that the big players are paving the way here - Facebook's contributions to the scalability of mercurial has definitely made a difference for us.