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Which iPad, and how big is the file? iPad 2 can definitely handle larger documents than iPad 1, and the new iPad should do better yet. You'll have more memory to work with if you don't have other apps running; it may even be worth rebooting the iPad. Even though it only displays a subset of the lines at any one time, it appears that it needs to load the entire document into memory.

If you sync your iPad with iTunes, have a look in your ~/Library/Logs/CrashReporter/MobileDevice/<iPad name>/ folder and see if there are some files named LowMemory-<date>.log which give a snapshot of what was filling up memory when the iPad had to kill something because it ran out of memory. If there are any files named OmniOutliner-<date>.log, you can email them to for examination.