Section Access really doesn't come into play here. You have to do it based on a field in the document. Check out the attached and you can use any field other than Email, if the users are have Email accounts in AD.
Reduction can be done for any number of values in the chosen field (=end-users).
It will certainly affect performance in a bad way. Your QDS may start monopolizing your disks for extended periods of time. If your publisher is running on the same machine as your QVS/QVWS and distribution occurs during the day (and your server isn't ready for the task), your end-users may experience bad AccessPoint response times. That's why the Publisher is often relocated to a separate machine with an I/O optimized architecture (fast disks).
Do a test with say 25 or 50 distribution targets. It should scale in a linear way up to the intended number of end-users.