Clustering is a good approach, but you can combine it with even more:

a) Lightweight markers: my own 
implementation<http://blog.martin-matysiak.de/2011/01/a-lightweight-marker-for-google-maps-the-simplemarker-class/>only
 weighs 1 div node per marker in the DOM hierarchy. In comparison to the 
original google maps marker it saves a lot performance if you don't need all 
the features.

b) MarkerManager: In the "GMaps Utility 
Library<http://code.google.com/p/gmaps-utility-library-dev/>" 
there is a class (called MarkerManager) which does more or less what you 
described in your last sentence: Markers that are out of the viewport will 
be temporarily removed from the map, thus saving even more DOM nodes. 

This plus clustering should be good enough for thousands of markers.

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