To begin, the demand for transaction and space on the block chain can be considered infinite. From this reasoning we can infer that by specialized hardware we really mean & connections we really mean high-end datacenters.
Demand for
any commodity can be considered infinite if the price is low enough. This was what my paper was about! I showed that even though "demand can be considered infinite" that the size of the blocks mined would always be finite. That is, the supply curve always intersects the demand curve at a finite block size.
So, no, you can't infer that we'll need high-end datacenters (I do agree that hardware costs will likely increase, though).
What you call a transaction quota I call a check on centralization. Remember that free market is not inherent to Bitcoin as it works under specific rules to carefully assign the players incentive. I suggest an irresponsible block size policy can change these incentives for the worst.
A check on centralization enforced by
a centralized group of developers?
The physicist James Clerk Maxwell hypothesized a daemon who could quickly open and close valves to collect the air molecules with higher kinetic energy from the slower moving molecules, thereby creating a perpetual motion machine.
The cryptographer Gregory Maxwell hypothesized a daemon who could control the block size limit to prevent mining centralization without turning into the very centralized force the daemon was created to fight.