There is a setting in web.config which allows you to set the max number of items in the custom report which is 1000 by default. The entry is as follows:
<maxWorkitemsInReportList count="1000" />
You can set this value whatever you want. However, as you pointed out there is a scroll issue on IE. The good news is when I tried this on TFS 2010 SP1, I couldn't repro the scroll issue, which means it was more likely fixed for SP1.