I’ve seen problems with provisional ratings on the low end. A player might play in his first tournament after playing online Chess. His chess skills are growing, but he has never had to keep a scoresheet or punch a clock. He goes to a local low cost tournament, held at a G/30 format, and does terrible because he can’t manage his time and is horribly distracted by the scoresheet. He starts out with an incredibly low rating. However, in his second tournament, he is not so flustered, and beats people ranked hundreds of points higher.
(This phenomenon led to two different 1000+ point upsets at my last tournament.)
I don’t think this is actually a “problem” that needs to be “fixed”. It’s just one of those cases where, with insufficient data, the algorithm makes a bad method of estimating future performance based on past performance. For the most part, the system works.
Re: directly addressing the OP, there is no limit to how high a rating can go using the ELO system, but there is a practical limit. It can only be a few hundred points above your nearest rivals, and then only if you consistently beat those rivals.