Network Analyst: arcpy's 'Solve' running out of memory
I found the answer is due to python.exe having a limit of about 2GB.
A solution is to Set 32bit Executable LARGEADDRESSAWARE Flag to True.
Unfortunately I've never managed to get to test @user27148 solution on ArcGIS 10.0.
Currently I'm working on the similar problem and can now confirm that with version 10.5 and 64-bit background geoprocessing installed I was able to run very similar analysis on even larger files.
Before installation of 64-bit I was getting similar 'out of memory' error. Running Python script against 64-bit resolved the issue.