Of course there are restrictions that cannot be overcome by software means. Even the best software cannot accomplish anything that is not possible with a given hardware.
The first an probably most important issue here is the performance (computing speed) of the computer system and its graphic hardware.
The next hardware restriction is the speed and precision of the motion tracking system. If the tracking is not accurate enough the resulting frames will be distorted and the 3D view will not be satisfying. Especially pointing at objects or grabbing them will be a hard or impossible task.
The size of the virtual space might be limitless (or just limited be the computational memory and speed) but the size of the real space is limited even in the largest hall. Therefore a usable CAVE has to be installed in a way that it uses the given space in the best possible way.