Hmm ... I have heard about this, but didn't experience it myself. But probably because I generated the XML myself and just pasted it into my config file, thus getting around all the LOR limitations and busy work.
Your not setting the channels up as DMX in LOR, right? Your just setting everything up as a regular 16-ch controller, right?
Also, do you have the latest version of S3 ? I thought they might have removed that problem in a December release?
I've thought about creating and application or utility that would read in your LOR config file, and then allow you to generate your additional pixelnet channels ... because its just simple XML additions. The nice thing about generating your XML for the LOR config files is that you can make the names a lot more descriptive and helpful, vs. in LOR the default channel name is always "New Channel". On mine, I put the pixelnet ch# and the LOR network and unit# and circuit# ... really helpful when making a group to represent a SS Item with 120 RGB nodes.
The thing I found out was the LOR doesn't always build the XML in a consistent manner. I've had 16 new channels added to the bottom, but sometimes it interleaves the channels was pre-existing ones ... and then eventually starts adding at the bottom. So that the squirrely part. I ended up added the first 16-32 manually ... then edited those, then put in my generated XML after that ... since at that point, LOR was done interleaving sequence numbers and I was into the NEW sequences numbers that it assigns for the new channels.