it could cause some undue server load. Grabbing the entries from the database and filling out the template won't be the issue as far as I can tell. What'll really suck up system resources is sending 1000 unique emails through sendmail all at once. You may want to consider sending out the email in batches every couple of minutes till the job is done.
I'd retrieve the names once from the database, store them as an array or some such in a flat file, and have a cron job wake up and send X emails every couple of minutes, removing those addresses from the list and resaving the list.