Yup, same there (with Terminal and ToeTerm) - it’s BusyBox indeed. I can pass echo a string of 1024 characters, quotes included, any more characters simply isn’t allowed to be entered.
Using fish I was able to pass echo a string of 2808 characters no problem, quotes included, so that confirms it further.
It’s quite rare to hit this limit, but Whisperfish registration workaround constantly hits this issue (but it shouldn’t be needed anymore for vast majority).