The queue limitation, AFAIK is 200 videos:
You can queue up a maximum of 200 videos in a Watch Later list. The same limitation applies for any created playlist.
Note:
Make sure that you're preloading videos having the device charging and with an active Wi-Fi connection, in order to have them correctly preloaded to your phone.
##YouTube Instructions for a successul preload
YouTube Instructions for a successul preload
According to the YouTube Blog, it's mentioned that the preload process works if the phone is charging and a Wi-Fi connection exists:
you can now preload and temporarily cache videos from your subscribed channels on your phone anytime it’s charging and your WiFi is connected. Just enable “Preloading” in the Settings menu. You’ll still need a connection to play the video, but once you do it’s smooth sailing through the latest from your subscribed channels and Watch Later queue.
Additionally, you need to have an active connection when pressing the play button.