Hosting it in Cooperative mode as opposed to some other mode will not significantly affect the number of objects that can spawn. Jake only suggested it because that's the closest multiplayer can come to single player (yes, multiplayer Cooperative is more like Single Player than multiplayer Single Player is).

TSF has a somewhat higher limit than 1.23, so consider using that. If you want help with actually reducing the object count you'll really need to be more specific about what objects you're using so many times.