i got a mimas sized moon in the game with out any problems, as part of my atmospheric/orbital mechanics simulation. it worked, all be it kinda ugly (low poly/tex res). of course it was merely a prop to test orbital maneuvers, weapon collisions caused crashes, the ship would go right through it, and satan help you if your apoapsis went outside the mission bounds. i did the same test with tethys, but it prooved to be a little too big, you get the wobbles if you raise you orbit even slightly. mind you this stuff was mostly for experimental testing of a script, not an actual production mod.
another idea about rendering rotating planets as part of a skybox, would it be to horizontally scroll a texture about a fixed partial sphere to simulate a low orbit about a planet. the texture would be a cylindrical map of sphere, it would 'loop around' by means of a simple uv coordinate transform. only the visible portion of the sphere need be included in the model, and again perspective tricks may be employed to reduce the actual size of the model.