Off the top of my head (it's quite a while..), lattice gas models wind up giving you a velocity-dependent viscosity, i.e. the viscosity of the fluid is a function of how fast it is travelling relative to the lattice. This is unphysical to say the least: while I think you can apply some sort of rescaling to alleviate it, it doesn't make it any easier to get to high Reynolds number flows: that and the huge amount of averaging make lattice gas rather impractical compared to later methods.
> Also, which continuum are you referring to here? Number of particles? Lattice spacing?
By continuum I mean you write down the continuum Boltzmann equation, i.e. a partial differential equation for the evolution of the single particle distribution function. You can then discretize this onto a lattice to recover the lattice Boltzmann method.