Thanks heaps for the replies everyone.

Some great points made there. I would agree that a halfway solution (eg 40 medium sized pages) could well be the best idea but I can't see how I can break these definitions up like this. Except by alphabet which, whilst might make it easier for visitors won't help with optimisation really.

To better illustrate, these are automotive terms. Here are the A's to give you an idea-

ACCELERATION
ADAPTIVE CRUISE CONTROL
AFTER-MARKET PRODUCTS
AIR CONDITIONING
AIRBAGS
ALL TERRAIN VEHICLE (ATV)
ALL WHEEL DRIVE (AWD)
ALLOY WHEELS
ALTERNATOR
ANCAP
ANTI-LOCK BRAKING SYSTEM (ABS)
AQUAPLANING
AUTOMATIC TRANSMISSION

Pretty hard to categorise into topics I think.... certainly for more than a couple of broad ones anyway.

I think done well either method can work well for the user using the right design & functionality so it really does come down to SEO benefit. And it's not for advertsiing so page views aren't important.

I'd go the lots pages option for sure if I weren't concerned about a Supplemental Index issue but I am from previous experience, when I've added a heap of new poages and the link juice has been diluted so much that most of the pages don't make the full index. On the other hand, how often do you see monster pages pop up in SERPs? If not, wht not - surely it can't be too hard to get a single page in the full index and cram it with 1,000's upon 1,000's of potential search terms? Because this doesn't seem to work, I suspect Google might have a weighting or even a cut-off for pages of a certain size.

Any more thoughts? Are either of these two concerns justified?