I think not having a full screen option in the iframe is a restriction from Vimeo and not from the RC. The fact that embedding vimeo is possible is more of a side effect of allowing iframes in the HTML tool rather than a supported feature.
This is about to change, however, since we are currently testing an "embed" tool, that should be more user friendly way of embedding videos. It would also support YouTube, SoundCloud, Prezi & Madek and so on (for portals that allow embedding of course !). I do not think we can really support full screen vimeo within the RC though, since this may get us into trouble with Vimeo. I would have to see what their policy is exactly on embedding.
The large video upload problem has been bugging us and the developers for a long time, especially since we have trouble reproducing it (I just uploaded a 1.7 gigabyte video file without problem).