This topic, depending on the battle, can be hotly debated among historians. Occasionally archeological evidence can shed light on the battles, but often historians must defer to the written record. That said, most historians won't take the figues exactly at face value. If the army in question is Egyptian, there may be less available. The point I am trying to make is that the written record should not be completely thrown out just because numbers are inflated, nor typically is it. There are certainly historians who do that, however for the most part the written record is trusted until there is something that brings it into question.

With Caesar, often times there are so many sources showing both sides that historians can typically discern a fairly reliable timeline. With figures, it is best not to throw out evidence simply because there may be bias. Every historian is biased in some way and that is not necessarily a bad thing. It can potentially provide a balanced account, if paired with others. Unfortunately, if (such as in the case of Zozimus) that is the only account of that battle, it can't be thrown out simply because the facts may be skewed due to bias. If a source is to be doubted, there needs to be more than that. If there were, say, archeological evidence, or other written evidence showing that this could be reasonably questioned, then it could be doubted. TL;DR The rule of thumb for most historians is "innocent until proven guilty".

Purely historically speaking, I think it is entirely likely that Zozimus had the numbers correct. The ancient mediterranean world was quite populous. Rome had at this time a population of 1,000,000. Alexandria had a population of 500,000 (both roughly speaking). Palmyra was a major trade hub and It absolutely could have afforded an army of that size. Armies of this size were not that uncommon, either. For much of Rome's history the entirety of the army consisted of about 300,000 legionaries. By the late empire (when Zozimus is writing), it is believed to have tripled. This meant that the Romans could absolutely have brought massive amounts of man power to bear, and since Palmyra was actually able to defeat Rome once, it had to have a sizeable army. For more info on the Roman army at this time, check out Arther Ferrill's book "The Fall of the Roman Empire: The Military Explanation". Hope this helps!

Edit: I have removed some information which Iphikrates indicated was actually false.