I wasn't aware of the purported regulatory radio limits on power, but I can report anecdotally that I found a huge jump in usability/signal strength/ownership satisfaction when I started replacing my old ZWave 1 stuff with the 500-series or above hardware (ZWave "Plus" is the name for these sometimes).

This "LR" stuff you mention is what I think some are calling the Z-Wave 800 series. It more than doubles the radio range of the 500 series stuff and greatly reduces power draw for battery devices. However, I have 500 and 700 series sensors that only need a battery change once every ~2 years or so. I don't find that to be too much, and the signal strength has been no problem for me in an old brick house. I do have a handful of powered zwave devices around though, and these act automatically as repeaters for the other devices in the mesh.