It seems that enough people spoke up, and the result is VICTORY! Microsoft has restored the ability to increase rule size up to 256kb in Office 365. This should be a big help to people who have a lot of rules.
My colleague, Ben M. Schorr of Roland Schorr & Tower gave me the news just last night.
If you are on Office 365 and need to increase your rules (and this is a need, not a want) contact the Office 365 folks. If you need assistance, contact me and I will put you in touch with Ben who has been kind enough to offer to help.
I have to give credit to Microsoft, when enough people spoke, they listened.