The Express Edition (4GB) should be more than sufficient for 1,250 clients. The note in the Deployment Guide is fairly accurate. We have seen several instances of a couple thousand clients (more or less) comfortably existing in a 4GB max SQL 2005 Express database environment. The biggest variables that affect database size are the Managed Computer inventory tasks, and what objects you capture, and the number of tasks and task history retention.
Your 300mb test database is about typical for an initial installation -- and that's primarily based on the space consumption used for the WSUS Inventory. You can roughly estimate this based on the current size of the WSUS database, as we duplicate almost all of that WSUS database into the Extension Pack database to support reporting. What you're not seeing with your six client test environment is the impact of the Managed Computer inventory across a thousand systems.
Note also, that even if you did encounter space issues with the Express Edition, the Extension Pack does support a SQL Server SKU Upgrade, so it would be fairly simple to upgrade the SQL 2005 Express to SQL 2008 Express, or to Standard Edition, should that be necessary.