I think what character limit does is you actually have to commit a character instead of your filler. You can't play one good guy and one bad guy at the same time on the same continent anymore.
It also forces you to suffer the consequences of not having people interested enough in filling positions. Other realms aren't having a problem. So it should be possible. If not, try and figure out how to attract more nobles. Go to war more, or RP everyday in the realm.
