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.htaccess is just a file the webserver is designed to parse.
If AuthConfig is set to All, or other settings, it merely contains directives on what to do for that subdirectory, and any subdirectories thereof.
Apache checking for .htaccess in every subdirectory of the root before finding this one will cause more inode lookups than most .htaccess flat file password combos could ever hope to, especally with FS caching these days.
Generally, you can handle a few thousand if you actually have to, but adding/removing will become a pain, esp if you're not properly locking the file. Using an SQL DB or a state driven key/value pair (memcache, redis) would behoove you for future growth.
I like pie.
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