I've always been told that there just isn't enough surface area inside a mopar style torque converter to get the holding power for high powered combos. The shape of the bellhousing dictates the converter be smaller than the GM stuff. All the more reason to go to a powerglide or turbo 400 setup.
Now, how much power is the limit? I don't know.

Having said that, there are guys making good power AND running good ETs w/ 727s. Brad Watt, Scott Cheek, and Larry Boyd all make REAL good power and still use a 727.
My converter (Atlantic Coast Converters) seems to work really good, but I'm not where those guys are. Mine is somewhere in the 1150 hp range.