you are confusing script timeouts with mail limits
they are not the same thing.
The script timeout is the time that the server will allow a script to run before timing out.
UE will try to over ride any server imposed timeout, to allow the script to run as long as need to send the emails based on the total number or emails, and the number of email that can be sent in a time frame.
The settings in UE can be used to keep the number of emails being sent at a time with in the servers limits.
But it sounds like the server does not allow for the script timeout settings to be modified to allow the script to run and complete sending all the emails.