The reason blockland only shows 8 lights at a time is that is all the open gl api can handle.
You can make your own high level code that chooses, basically, the 8 closest "lights" to actually show, and keep the further ones dark, put no more than 8 "dynamic" lights are possible in OpenGL. I know this because I've programmed with it.
EDIT: The point here is that even changing the source code, Badspot can't add support for more lights at one time. I think.