Sadly XML2 has a hero stat limit. You can only add 20 heroes. Be it default or custom modded characters. The good news is, this is only available for XML2. Because MUA does not support danger room PvP. 
That's not the limit I was talking about. I already know the game's overall hero limit is 20ish. I was talking about in the Danger Room where when you select characters to play as, for some bizarre reason they decided to make it so you can only select 4 "heroes" (of the main cast in the story mode) for either side in battle within the Danger Room.
Example: Let's say I want to have a 4 vs. 4 battle with Cyclops, Wolverine, Jean Grey & Nightcrawler as my team, and Colossus, Gambit, Rogue and Storm as the other team. This was possible in XML1, but not in XML2. They prevent this with a little notice stating that only 4 heroes can be selected in the Danger Room
absolutely. This means no full Brotherhood team fighting an X-Men team as another example. I feel it worth noting that I'm speaking about the sparring mode specifically and have never played the human vs. human mode before, so perhaps you and I are not even fully discussing the same thing if the game treats those two areas differently.
I don't understand why this decision was made. I wanted to have unique match-ups like Magneto and Scarlet Witch teamed up with Wolverine and Colossus vs. Jean, Cyke, Iceman & Juggernaut. Things like that. If there's a way to remove
that limit, I'd be incredibly thrilled.
Additionally: How on earth
did you accomplish this mod? When my schedule clears up, I'd definitely want to take a look into doing some more modding to XML2, and fixing the Danger Room would absolutely be on my to-do list.