Having separate servers would mean nothing could be seen till transferred to that server so thats why level streaming is important for open world games.
As to number of piece count limits, the way you describe it would he kind of cool; ie its capped when the drag is too much rather than a raw count. I’m just not sure how the drag could be monitored and/or separated from other factors. If it could be done that way, that would be more meaningful as a method since number is not the issue exactly, but combination of player items and overall performance. That gets sticky when you consider client and server have their own dependencies and a better server can handle more stuff, but at least that kind of system would address the real problem.