The issue was introduced by the fix for #7202. The problem is that when using ReadConsoleW() it is not possible to enter more than MAX(254, buffer_size) chars before the EOL - console just not accepts chars that not fit into buffer. Its the same for paste from clipboard or manually typing.
This is not documented limitation but I found no other explanations of what I see. Thus I want to ask - what maximum 'single line' length is acceptable ? Note, this is not a limit on the length of a whole pasted text, this is about length of every single line.

Perhaps you cannot go beyond 8191 characters so it looks like a reasonable limit.

You refers to the command prompt (cmd.exe) limitation, it is not about console in general.
Actually, I'm able to paste into (patched) isql text greater than 10K characters. One line, of course.

While I agree, that such cases is not what really happens, and even 1024 chars per line is more than enough usually,
I want to be sure that we will not be asked to enlarge limit again and again.

Currently, I use buffer of 32K characters for ReadConsoleW() and consider it as big enough.

Have you tried with ReadFile instead of ReadConsole? The documentation suggests they should work similarly on a console handle.

https://learn.microsoft.com/en-us/windows/console/readconsole :

ReadConsole reads keyboard input from a console's input buffer. It behaves like the ReadFile function, except that it can read in either Unicode (wide-character) or ANSI mode. To have applications that maintain a single set of sources compatible with both modes, use ReadConsole rather than ReadFile