I think it's better to cap the number of players rather than the number of characters. 50 players is still far too many to suit some modding/plotting/gameplay styles, and the domination of large games in DWRP is part of the reason why most games are so similar. If people are able to maintain real activity (not just a few network posts boomeranged with a friend two hours before AC is due) with 2, 4 or more characters, I don't see why they shouldn't be allowed to play them.

Set cast caps are kind of tricky because they limit some canons severely and barely affect others at all. But I do think mods should have the balls to say "hey, we're getting too many characters from one canon, and it's affecting the game balance." The point of rping in a game is to interact with the game as a whole, not just your own cast.