Absolutely.
I can't speak as to an actual limit on the NUMBER of XREFs ALLOWED in a drawing, but using many many XREFs in a manner such as part libraries in Inventor/Solidworks is a great way to organize and reduce error.
The guys that do our piping design for some of our larger processing plants do this. They'll have a separate .DWG for 6" Butterfly Valve, 4" Flange, etc. and will just XREF in the necessary parts to complete their piping design, apparently. It creates a bit of a large folder/subfolder/subfolder assembly of XREF files, but it's actually not hard to manage at all.
One of the -BIGGEST- benefits I find, is that you don't have to mess with the layer manager when needing to turn some things off. Having a large tree of XREFs allows you to simply "unload" the things you don't want to see at the moment.
For instance, if I'm working on updating finish grades of my foundations under the tank pads, I can turn off all of the piping model except the tanks, equipment, and leave all the civil and structural series XREFs on.
For larger projects, I would never go back to doing it all as blocks and simple drawings... having a large number of XREFs is the only way I can keep my sanity when managing the CAD work for such large projects (large to me)
In fact, some files contain nothing except XREF data... the overall PIPING XREF has no objects (lines, plines, blocks, text, etc) in it... simply XREFs of sub-assemblies. The overall STRUCTURAL XREF has no objects in it... just hte xref's subassemblies for each platform, pipe support, foundations and other structural elements. Then there is one large container file that XREF's in all of the discipline files to create the entire model of the project. So the top two levels in my XREF tree, really has no objects other than XREFs in them.