32-bit can address either 1gb (386 compat), 4gb total (normal) or 4gb fully (PAE). We use the normal mode, since PAE is slow and causes all memory operations to take longer. PAE would also require a Pentium Pro at minimum.
In this mode, all memory has to fit in 4gb. So if your graphics card has 512mb, that's only 3.5gb left for your ram, and so on.
A 64-bit kernel with 32-bit apps is a good combo: kernel sees all ram up to 16 petabytes, while an app is still limited to 4gb total. But since this 4gb doesn't have to overlap with any other app's (if you have enough ram), it's not really needed to have 64-bit apps.
Unless you edit over-4gb videos or 3d models or something.
If there's enough demand, I'll make a 64-bit kernel for TC 3.x.