I believe there are some conversion tools out there that work via an extension of what you said above. Instead of storing the WAV as a single giant instrument sample, the tool would chop the WAV up into multiple such samples, and the tracks would then basically play each sample in sequence. It gets around the limitation on the size of a single sample, but there are of course still other limitations on total number of instruments/samples (which would effectively limit how long time-wise the WAV can be), and fundamental limitations such as the sample size and rates supported by MOD format.
Basically it's all a "cheat" of sorts to jam a WAV file within the confines of the MOD format which isn't designed to do this at all. As others noted, it is basically the difference between a recording of the audio (the WAV) vs the sheet music notating how to play the music (the MOD). Since Tsyu is still around and he's the guy that worked on Lemmini, maybe you're better off just asking and see if he could provide support for MP3 or OGG.