If you REALLY needed more switches, you could start using variables instead.. Other than that, if you're actually going above 5000, try using key items for important event markers, and use those instead of switches. (Beating a dragon boss would give you a Dragon Bone or something, and anyone you talked to while you're holding that Dragon Bone would react to you beating that boss.)

Of course, a variable that you set to a certain number (for the main quest) would work also. You just increase that number as you go further down the main quest, which would change people's reactions towards you.. side quests don't progress the main story, so your townspeople don't really need to care about those, they should just point you ahead to quest point #42 or something. With this, you'll save more switches the longer the quest is.