First of all, you should not do this in a dropdown, you should use a select page. It has the pagination and search options you are looking for.
Second: Is there any way to get the data via xpath instead of microflow? If you could define your selectable objects via xpath, the system would not need to retrieve everything at once. If xpath is not working because of the logic, you may want to consider using some helper entity that you use to cache the selectable objects list and use xpath on your reference selector.
Large drop down selectors are not easy for the users, besides the performance draw back. you might want to rethink the design.
For large sets, lay loading, with search and select, have a look at https://appstore.home.mendix.com/link/app/2695/
Or explore some of the other widgets in the AppStore