I would break the job up into smaller zips. See if you can separate the items into 3 folders of 1 GB each, and make 3 zips.
I don't know if there are hard limits on the Compress utility, though 1.96 is a nice round number that suggests a limit. Still, I wouldn't be surprised if you've made larger zips in the past. The limit might depend on available memory. For example, you may have installed something new or updated your system since then. You could try shutting down any other apps, or you could try making a dmg instead. My advice would be not to waste time trying to make a bigger archive. 1 GB is plenty.