In transformer the maximum number of categories allowed under a category is 65000 or so. Is that the case with TM1 too?
No. The quoted theoretical maximum number of members in a TM1 dimension is 2 billion. (But IMO you would start running into significant practical performance limitations once past more than a few hundred thousand to a few million members depending on the application and usage). However I am fairly certain 65000 direct children or descendants from a given consolidated node is not a problem in native TM1.