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Firstly, only the thumbnail is copied - not the full file so the space the database uses is nowhere near the size of the full kits.
Some people multi categorize - They keep kits intact then copy each paper and element into separate folders and then keyword them by pattern, solid, colour, theme.
To be honest, I'm way too lazy for that. I just keep my kits together and add Designer/Kit Name/Location of item eg. DVD1 and a general keyword such as paper, slide, ribbon.
You should be able to remove an item. Offhand I'm not certain but can you right click on a thumbnail and delete it from the Library?
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