Depending on your use case (particularly if it is research-oriented), "scipy.spatial.distance.cdist" and "scipy.spatial.distance.pdist" are your friends. If you are doing something in production, the PG extension seems like a good bet.

One way to potentially answer your question about text-chunk-granularity is to take a random sample of 500 pieces of chunked text and look at several "most similar pairs." Do this for a few different chunk-lengths and you'll see how much information is lost...