First of all let me say, well done for being a fellow Mugen fan!
I am working on a custom version presently

(Mugen-Xer0)
Secondly I'm very interested in this option but if you say you're not a very technical person then that makes me a total luddite. I had a few questions...
Not really because someone could easily pick up on what I have done and do anything with it as anything I post here is pretty much fair game unless I were to post it specifically not allowed which I don't think you will ever see from me. At any rate someone may read this post and go do something about it so who knows..but it is definitely not out of line to ask. It is better than assuming
1) What are the upload limits in size and length of file.
Default for php is 8 MB I believe you would have to change this value in the php.ini file or ask your webhost to do this simple setting for you. Other than that it is really on what your server can handle. I believe it is possible with JS to allow only specific resolution ranges on upload but I would have to look into that. In the script no limits on time and size is set by byte value right in the script with a quick edit...you would just change that to whatever you want to allow in bytes up to what your php.ini file limits you at.
2) Is it very demanding on the server, does it slow down the site if lots of users are using it?
Well generally speaking I have not had any problems with flowplayer watching 130 min videos simultaneously with a few people abroad while a couple dozen other sites are running on my vps which is not a beast by any means...it is average. As far as the load...you could use moderate to low resolution as allowed upload abilities with some additional scripting.
You bring an interesting point and I will have to gather a crew to try and crash my server via the load of the video to see what it takes...that and finish learning up on how to construct a full addon

Uploads themselves don't really effect me greatly at all but to me uploading a movie is the same as an image just bigger really so it is a longer duration until the upload is complete.
Now re-encoding a video would swallow up some resources for sure but the requirements are also very different from those of uploading a web friendly video to be called into a container that a js snippet will convert into a Flowplayer container.
3) How many videos have you uploaded or are you planning to upload?
Well I am just learning and don't really run too many permanent sites. In instance I have had many hundreds of videos on a server in the past. I also have another server that's whole purpose is to store my videos. It is great for centralizing resources and most of the video load appends to the server while actually hosting the flowplayer files is done on the site's server leaving a very small footprint: that or delivered from a cdn. At one point all I did was use my server for mobilizing my video collection. For those same reasons I have not tested it with hundreds of people viewing videos simultaneously but now that you bring up load...I think I may try to get a few people to see how she holds up. At the current moment I upload videos to test player configuration and usually delete them quickly but the amount of videos actually on the server really just boils down to how much space do you have.
Hope some of that helps you and actually thank you for your questions. Anyone that can correct anything I have said above feel free to.