I used that component long time, in J3 era, so I could forget.
About file: media/vendor/choicesjs/css/choices.css as you mentioned, it's Joomla core file, not from Helix.
And indeed there is max-height value for dropdown element, evidence
.choices__list--dropdown .choices__list, .choices__list[aria-expanded] .choices__list {
-webkit-overflow-scrolling: touch;
will-change: scroll-position;
max-height: 300px;
position: relative;
overflow: auto;
}
.choices__list--dropdown .choices__item, .choices__list[aria-expanded] .choices__item {
padding: 10x;}
I would ask digital-peak support for details. Our Template help ends here. In theory you should be able to override two values, with 360px and 5px for at least now.