External lists can not display more than 2000 items, this had me stumped for many hours

http://social.technet.microsoft.com/forums/en-US/sharepointadminprevious/thread/cc05f9d6-b83b-4e43-8f5b-400dd16ff795/

Sridhar has explained some fixes in the post below, but did not try them, just changed criteria so that less number of records are fetched.

http://blogs.msdn.com/b/sridhara/archive/2010/03/10/bcs-and-external-list-learning-part1.aspx