It very much depends on how do you approach the problem. Loading 500 shapes at a time is not the best option in my opinion because of many reasons not just the performance. The performance depends also on will you need specific Layout, Connection Routing, what will be the content of the shapes and so on. Usually loading plain 500 shapes is not a problem for RadDiagram. But with that amount of information, I would think about more "Lazy Loading" the whole diagram, or making "Drill-down" functionality. This way the users will be able to load only the needed information. Usually the bigger problem with 500-1000+ shapes is not just the performance, but the readability of the information. You can't just look at 500 shapes and find the piece you want.
So basically if very much depends on the kind of information you want to show, the amount of visuals you want to render, the layout and so on.
Hope this helps.
the Telerik team