Thanks for your bug report. I have not been able to reproduce this issue so far.
Can you provide an example that reproduces this issue?
Your example would need to be a step by step method that I can follow to cause a server to send mIRC a line longer than 1024 characters.
Alternatively, you can simulate incoming messages using /parseline, for example:
test {
var %text = A long line of text
echo text len: $len(%text)
parseline -itqp :nick!user@host PRIVMSG $me : $+ %text
}