I'm trying to perform a very simple file copy on Linux and have run into what appears to be a possible file size copy limitation.

There is no such limitation in Linux, since you say that you can copy file with the system "cp".

When I run this simple script it appears that it works as I get no errors but the file never copies.

You don't check for any errors, that's why you don't get any. Try doing something like copy($file1, $file2) || die "Error: $!";.

I'm running Linux Redhat 2.1, (actually ESX server 1.5.2)

Are you sure? ;)