Unfortunately I think you may be out of luck. The issue is that your new limit of 0 prevents you from paying the fee but a transaction fee is required to prevent the network from being spammed. I also believe that setlimit tx's can only have 1 input and 1 output so that it can be detected as a setlimit transaction. So basically I don't think there's any way it can be undone. Originally we were going to make a withdrawal limit of 0 signify an unlimited withdrawal limit but it made much more sense to do it the way we do it now. We probably shouldn't have allowed the limit to be set to 0, but it could be useful in certain situations where coins need to be destroyed without having to send them back to the coinbase account.
It's an interesting entailment that setlimit0 effectively freezer burns an address.
Speaking of freezing and burning, does Cryptonite's account tree structure natively support creation of sidechains?
They are all the rage in BTC circles ATM, so if XCN does already have that functionality we should be advertising the fact.
Well I just had a quick glance at the recent sidechain paper and they describe a "two way peg" mechanism, meaning coins could be sent to the sidechain and back to the parent chain at a later point in time. Cryptonite may be limited to a "one way peg" system because once the coins have been locked by setting the withdrawal limit to 0 you can't unlock them at a later point in time, which is required in order to send them out of the sidechain and back into the parent chain. However they do mention in the sidechain paper that Bitcoin would need to undergo a soft fork for their sidechain proposal to work, so right now even Bitcoin cannot support a two way peg mechanism. So I guess if we wanted to add support for a two way peg mechanism in Cryptonite we could do the same thing and implement a soft fork by adding some new type of special transaction which increases the withdrawal limit. Although it may not be so easy for us, a hard fork may be required. You have to keep in mind that their sidechain proposal locks and unlocks coins using the scripting system, but with Cryptonite we have to approach the problem in a different way because we don't use scripts. But yes, I believe sidechains could be possible.