One point you're missing is that it's not just raw power, but also speed. Currently, a legal ebike has a limit of 250 W, but irrespective of power, it also has a 25 km/h limit. If you're doing 25 km/h, the motor cannot be putting out even 1 W.

In my opinion, there's some value to power limits, in terms of how strong the acceleration is. But speed is the much more important factor for safety most of the time.