Hi David,
Thank you for your query.
To be honest, I do not think there is a straight solution to this problem (as per my knowledge).
I did not find any defined limit for the contacts hierarchy (in the documentation), also I do not see any way to increase this.
However, i would suggest to break-up contacts import into batches. I am not sure how many contacts your importing.
Lets say, you divide them into 2-4 chunks and try importing first batch.
Once imported, fix the hierarchy for these contacts (so they are not on same level and next time you import limit is not reached).
I understand, this is not an ideal solution but this should do the job.
Secondly, I do not see any option to by default collapse org chart where number of records are higher.
Also, you may open a support case with Microsoft if you need exact reasoning or number (limit) on this error.
Let me know, if this helps.
Best,
Wahaj