Well, there are a few issues with building above 768m, but it can certainly be done. I've had a
build that resides at 4000m for a couple months now. (If you're interested, it's the SkyLounge, in the Garden of Mo, Louise. There's an elevator at ground level, at Louise (185,232).)
Yes, there is prim drift, not that you can edit anything usefully anyway (see below and prev. posts). Objects rezzed (by script, llRezObject) at even numbers (say 4000.000m) will in fact appear a few centimeters off the mark (say 3999.995m). Mildly annoying, especially if you're rezzing multiple objects in close proximity or where precision is required (there's a reason why all my furniture is to designed to float a fair bit above the floor).
Floating llSetText starts to develop a noticeable jitter at only a couple thousand meters. It's very minor, but noticeable. I've also noticed the occasional bit of camera bouncing here and there.
But, there's another point that causes more irksome problems. At some arbitrary elevation above ~767.9m, objects are deleted at odd intervals. Long-term non-physical builds can be problematic. I've not done any serious experimentation, but I can provide two data points: An object rezzed at 1000m lasted for a few weeks, while the SkyLounge (rooted at 4000m) is deleted every time there's an upgrade or grid reset (but apparently not when there's a simple sim crash). It's not overly difficult to come up with a scheme to periodically launch a sensor-enabled object up there, scan for the Lounge, and rez a new copy if it's been zotted. But it is another minor headache to deal with.
And, as mentioned above, if anything above 768m moves non-physically, or if it is moved with the edit tool, it will immediately pop to 768m. I've exploited this effect to make a 3,000m teleporter: the down elevator is a non-physical mover, so at the first hop it jumps over 3km down. Shaves a fair bit of time off the return trip, anyway.
Oh, the maximum unattached prim altitude is 4096m. Anything not attached to an avatar will be returned if its root prim exceeds this Z value. (I suppose one could make a long, skinny linked tower and push it above 4096m by a 20 or 30 meters, although I can't see any reason to do so, save for bragging rights.) This is true both of physical and non-physical objects. Vexingly true of vehicles, which will disappear and leave you to drop 4km to the ground.