Hi,
The first thing to do is to open the library in Photos.app, open preferences by pressing CMD , [COMMA} or opening preferences from the menu bar Photos>preferences. Check that the box 'Download originals' is selected in the iCloud tab. If optimise setting was previously selected then you'll need to wait until the original files are downloaded.
You should also see that the 'Use as system library is greyed out' button.
Close the photos app. Go to Finder and locate the photos library, then simply create a copy by highlighting the file, press CMD-C, go to where you wish to store the second library, which could be the same folder and then press CMD-V. A copy of the library will then be created. if necessary rename the libraries to make sure it is clear which library is which - you could call them primary and secondary.
If you double click on the original library you should see that the Use as system library button within preferences is still greyed out and within the iCloud tab, Download originals is selected. If you close the library and open the copy library you will see that the Use as system library button is NOT greyed out and in the iCloud tab it will say 'only the system library can sync with iCloud'. In other words, the primary library is sync'd with iCloud and any changes you make will be sync'd across all devices. The secondary library is separate and any changes you make will not be reflected anywhere else.
So you now have a choice. In the primary library you can hide the 12,000 photos as Tony suggested, just leaving the 1,000 important photos visible or you can delete the 12,000 photos and the deletion will be sync'd across all devices leaving just the 1,000 photos in iCloud photos.
Then in the secondary library you can either hide the 1,000 important photos or just delete them leaving the 12,000 photos visible.
BEFORE you delete any photos, I would recommend opening the other library and making sure that all of the photos are visible and not corrupted. Also you should make a backup of the primary library and store on a separate drive (not a NAS drive, ideally a USB connected drive).
You will now have 2 libraries, one that syncs with iCloud and another that is independent. When opening each library you can either double click the library directly or hold down the alt key when double clicking the Photos icon and it will ask you which library to open. It also gives you the option of creating a new library if you wanted to create additional libraries for any reason.