TK,
It looks like you hit the nail on the head! (That's why you are the developer, eh?)
Through trial and error, I believe I've found that the string following "FilenameFormat=" can be up to 32 characters long, INCLUDING the decal numbers and file extension which are not explicitly typed out. For example, the following works:
[Decal021]
MeshName=vertical_stab_ant
DecalLevel=2
DecalFacing=LEFT
FilenameFormat=F-4busnvf111vf111vtl
Position=-5.05,1.2
Rotation=0.0
Scale=5.25
DecalMaxLOD=3
There are 22 characters after "FileFormat=", plus seven more characters making up the actual file names (001.tga, 002.tga, 003.tga, for example) which makes for a total of 29 characters in the actual path. My testing shows that 32 is the max.
Hope I described that clearly. :?