Until a hard limit has been determined to how many people the server itself can handle (before it becomes unplayable 100% of the time), I don't think that this fight cap is worth it. I think the amount of factions on the server at that point will be well over two though, so this would become irrelevant with forcefully splitting alliances. Conquest may be a recruitment war, however this is incredibly good for the server population and growth. Just look at the tab list, about 95% of players who are on it have been recruited. Imposing a limit simply would not be good for mainstream conquest due to new players never being able to show up to fights. This does not go without saying that I would DEFINITELY like to see smaller scale conquest in the range of 20v20 or 50v50 (with much higher rewards than that of what Rivina has now to make it legitimately worth it). Another thing to take into account is that this would only lead to people getting around the system of equality by having "cheese" alliances where 2 separate alliances (both with the maximum amount of players) would both place on the same alliance at once and no matter what, result in one of these alliances winning.
The issue with this is that if the alliances do not come to an agreement, they're essentially both dead in the water and there is no resolution, other than just auto-defaulting to a specific number (which is definitely what would happen most of the time).
Tl;dr although not a bad suggestion, it's just not good for growing the server. Forcefully (key word) splitting the server into more than two alliances also is not great for recruitment either. What I would definitely like to see is people actually deciding to split off on their own. This would be incredibly positive for the server, and lead to a 3-way recruitment war as opposed to just a two-way recruitment war.