Can someone with “send on behalf of” send to a restricted exchange distribution list

The users send limit should be the one that wins in this situation, thats how its supposed to be any way. However, there are actualy 4 places you can set the mail size limit:

• The global setting
• The Exchange SMTP connector
• The SMTP virtual server
• The user mailbox setting

So you'll want to make sure they are all set correctly. Also this only applys to outgoing mail, incoming mail is always restricted by the global settting.

There is a good article here on each of this settings and the order they apply.

You can't just add external address to a distribution list as Exchange only allows you to add AD Objects (Mailboxes, Distribution Lists, Contacts etc) to distribution list. You need to create contact objects for your external email addresses. You can then add these contacts to your distribution list.