Yes it's possible... BUT, you'll need to consider the target format and if it can cope with the volume of the resulting mosaicked image (take a look at bigTiff and ECW). You may need to define your transformation to cap the number of tiles included in each mosaic set to control size, that's possible too. If you just take thousands of images and pass them into a RasterMosaicker with just the default settings depending on the hardware you have you may run out of memory after a while. Remember without a GroupBy parameter defined you'll effectively be placing all that raster into memory and virtual memory inside the RasterMosaicker until the last raster is recieved and the final image can be created. Your hardware may not cope with that (rather than FME struggling).

Do you really need to mosaick at all? You might find that your presentation tool has flexibility to mosaick on the fly and FME may just need to resize or resample the images in preparation.