This is probably controlled by MSN servers, so I thyink it is impossible. However, and as we saw with DP's it could be only a local check and MSN server would not be involved, but it's very unlikely.
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Joined: Jan 2003
RE: display name
No, you can't increase the limit of 129 characters. Even in the case it was a local thing and there was a patch to allow 129+ characters, the nick is stored in the server and the same that happens with multiline nicks (that are converted to 1-single line nicks) would happen here.
It's a limitation of the protocol and/or in server side.