wow. sprites that large are surely going to have a negative effect?

Quite the opposite. I think my 'record' is around 80 images inside the 1 sprite, there were a lot of rounded corners, hover effects and little icons. It would decrease the loading time considerably, given the amount of exchange time between server and user that would otherwise be used (which in the age of fast internet, will become the bottlenock).

I suppose overall load time might be a little faster (?), but I would think that the *apparent* load time would seem slower for the user

Depending on the circumstance. Most sprites I make are only 10-20kb in size anyway. You do find some people though who make 200kb sprites saved in PNG24 so they can support all the colours, yet if they had sliced them separately, or combined them into a few smaller sprites, would be a lot smaller in size. It's really about getting a good balance. There should be background colours and so forth anyway, so while the images are loading there's not blank areas everywhere.