The compiler shipped with the chipKit IDE is NOT size-limited. Like the ARM marketplace, the PIC32 market has some compiler/tool distributions based on gcc with "additional features" where then free version has some sort of limitation, OR you can use a less-featureful version of the basic gcc compiler that doesn't have size limitations (as essentially required by the gcc license(s))
ChipKit comes with the latter.
Competition does not doom a product unless the competition is better in every way. Since some of the complaints against Arduino are mutually contradictory, that's going to be tough to do...