I have an update to this, which hopefully will help your developers as well as other users that are also having this issue.

For our company, we have a couple of custom fields on the "Additional Info" tab.  There was once field that allowed the data entry person to input more than 32 characters, even though that field is limited to 32 characters.  I believe QuickBooks allowed it through the copy/paste process versus manually typing the data into the field.  

I exported the employee list, shortened the data in that field, and re-imported the file.

Upon re-importing the IIF file, it failed on a a few employees who had spaces in their first or last names, (Example: an employee with the first name "Mary Ellen".  It seems that QuickBooks doesn't "like" names with spaces. 

I went back to the originally exported IIF file where I had fixed the issue with the data length in that custom field, and removed the spaces from the last names of the employees that failed to import.

Upon importing the IIF file again, all records successfully imported.  I manually paged through all employees in the employee list, and could no longer duplicate the hang/freeze issue I was previously experiencing.

Hopefully you can relay this information to the developers so that they can do a better job at restricting the data length on fields that have an upper-bound.  As well as do something about how QuickBooks handles spaces in fields, like the name fields.

Other users having this issue:

• Export your employee list to an IIF file.
• Open it in Excel.
• You should be prompted with a dialog asking how you want each column formatted.  I chose "text" for all columns because in our data we have custom fields with leading zeros, and I didn't want excel to try and "help" me by converting the data with leading zeros to scientific notation.
• Once the file is opened, identify any weirdo data issues such as fields (other than the notes field) with long data; spaces in name fields, etc.
• Once you have identified all possible data issues, click the "Save" button.  Then close the file.  Do not save again if asked.
• Import your IIF file with the corrected data into QuickBooks.

That's it!  Hope it works for you, and I hope the Intuit developers are able to use info discovered by a user that they evidently have been "researching" for quite a while.