Yes. It's a DoS vector. The question is, what is a reasonable limit - and 16 characters fails horribly in that section.
Re:Ubisoft hacked, account data compromised
by cookiecaper on Tuesday July 02, 2013 @01:37PM
(#5979442)
Right, as the OP said, there is no reasonable excuse to limit character intake to less than multiple hundreds. I agree that some limit is sensible just to ensure someone doesn't insert War and Peace (or base64-encoded binaries or whatever) as their password.
A potential common excuse may be, "No one will remember a secure password in excess of 16 characters, we are trying to minimize support volume", but this is not a "reasonable" excuse.