The template editor is written in ASP. "Maximum Requesting Entity Body Limit" is the mechanism used to transit and save the code in the template editor. By default, ASP setting in IIS is configured to accept a maximum of 200KB.
Solution: increase your "Maximum Requesting Entity Body Limit" setting under ASP under your CMS web application. http://stackoverflow.com/questions/9466081/how-to-increase-request-accept-limit-for-asp-classic
