How many usernames can one domain support for bip-353?
Discussion
How are/would services like twelve.cash and phoenixwallet.me handle backup/redundancy of the username entries?
Many domain providers limit TXT records to 49. I wonder if that's going to be a problem for larger wallet providers?
Yep, if 49 is the limit it's most likely gonna be a problem even for uncle jim and them.
Back to running one's own webserver for a sufficient domain server... Or migrating to a few liberal domain providers?
Yep. Organizations may move their domains around to different registrars that allow more TXT records too.

Yes, but at what point do the performance issues start?
I was reading through this forum discussing around 50 million records on a domain (assuming we get to a point where a successful lightnin wallet provider/implementation gets to at least 50 million users) .
https://groups.google.com/g/comp.protocols.dns.bind/c/6InK8Qs8R2s
i dunno. nostr:npub185h9z5yxn8uc7retm0n6gkm88358lejzparxms5kmy9epr236k2qcswrdp do you know? this google article says most domains only allow a max of 49 TXT records. won't Phoenix have a problem once too many addresses are created on their domain?
There’s absolutely no limit. Some hosting providers add arbitrary limits but even the entire Bitcoin header tree in DNS records running in BIND is like 1G of memory…
I have seen no performance issues hosting a few million records on RPis for https://bitcoinheaders.net/
But, BIP 353 does contemplate doing multiple users in a single wildcard record.