Limit to number of contacts in a group email

That is fact. I had the same problem in my company when sending newsletters to our clients.

The Address Book does not limit the number os addresses you can put into one group, however my remote server is limited to 50 addresses.

The only way is to call your ISP, find out the limit, and then divide your address book groups accordingly and send separate e-mails.

I do not have the answer to this, but I certainly am frustrated by the problem, which I share with you.
Mail will not send out a Seasons Greetings email blast to 50 people. I have Time Warner Cable and their policy is:

Question:
Are there any e-mail restrictions?
Answer:
Yes. To ensure that our e-mail service performs well, we have placed restrictions on the size of e-mail sent and received. Each of your e-mail addresses has an "In Box" that accommodates 10 MB of e-mail and will hold e-mail only for 60 days. However, these limitations rarely affect subscribers because they can use Outlook Express to download e-mail from the “In Box” and store it on their computer. Likewise, there is a 10 MB limitation on the size of any e-mail message that you send. In an effort to prevent spam, we also restrict the number of recipients for a single e-mail.
Subscribers can send e-mails of up to 30MB in total message size, including attachments. Subscribers are allowed to send e-mails to up to 1,000 recipients every 24 hours per IP address. E-mails can have up to 99 recipients in each of the To and CC fields.
For more information, visit our Road Runner Web Mail FAQ page located at http://help.rr.com.

So, I am not in violation of the "99 recipients rule" with Time Warner. So, I must conclude it is Mail that is imposing the limitation.

Does anyone know anything about this, or can suggest a work-around.

Not certain whether or not Mail will limit you, but your ISP may. Some ISPs have limits on the number of addresses an email can be sent to in an effort to clamp down on spam.