either the limits are too low for the vast majority of computers, missing out on potential, or you have to exclude low performance PCs.
You need to make sure your game runs well on whatever you've chosen as the min spec PC. Using that as the base-line for limits isn't "missing out on potential", it's ensuring that everyone gets the same experience. Of course you can adjust the graphics/particles/etc, but in terms of simulation the game must be identical across all computers.. otherwise someone's going to get the unhappy message "Error: Your computer can't handle level 3, game over"!
Liero/etc are fun anecdotes but they're pretty borderline cases. AFAIK Doom had limits all over the place but there were still tons of wads made.
I just feel like imposing limits is part of designing the game and/or engine -- for instance, N levels have a maximum size (21x33 tiles i think). Perhaps people on higher-end PCs are "missing out" since they could theoretically handle huge levels, but really that's sort of a weird way of looking at it -- the game is based around single-screen levels, a limit that actually seems to help creativity.
I guess this is a difference in philosophy, I don't think SMB3 is any worse of a game for staying the same all these years. Definitely I'm biased though since we're working on a game that targets OpenGL 1.2