Not every project needs an upper limit, but some certainly do. A friend of mine did the 3Doodler kickstarter and it also wound up unexpectedly successful. (Blew through the original goal in the first few hours, and wound up making a few million dollars at the end of the 30 day campaign.) When they sold out of the planned first batch, there was a bit of a scramble to estimate how quickly a second batch could be made, how big it should be, etc. But, they didn't change the design of the product, so they were basically scalable by pushing delivery deadlines for successive batches out. Of course, the risk is if you have underestimated a per unit cost that would have become obvious after the first batch, you are still locked in to deliver subsequent batches at whatever price you got for them. If you sold the first batch, and then did a re-analysis of how best to do the second batch, it's possible that things could be done better.
When you pitch in for something like a Kickstarter project, making a guess of how well the people will handle the scaling is just a part of what you have to estimate. If there isn't a history of successful delivery of similar projects, you have to deal with the likelihood that your investment won't pan out. If there is a history of it, you still have to deal with the possibility. That's what happens when you spend money on something that doesn't exist.
That said, the game devs should absolutely stick to making an initial delivery before worrying about stretch goals. I have never seen a significant game project come in ahead of schedule or under budget. Ever. I've been starting some indie game dev stuff on my own time recently, and just getting a crappy game out the door really is a shocking amount of work. Getting a good game out the door is an almost inconceivable amount of work, and getting exactly the game of your dreams out the door is simply impossible. Considering that the original planned budget of the game was such a small percentage of the ultimate take, they could have just done the original game as a "practice run" to give something to the players and then used whatever was left as the budget for the bigger fancier sequel.