> The first-person shooter crowd has probably run into these limits
Too true. Early on, when people were still connecting over modems, the ping times were pretty much guaranteed to be well north of 100ms, even to servers that were relatively local. As universities started getting equipped with expensive low-latency/high-bandwidth internet connections players started getting <100ms pings and as a result these "low ping bastards" (lpb) ended up dominating servers.
Very quickly hpb and lpb servers developed to serve and enforce a bifurcation of the two groups of technology users. Scripts usually ran to kick/ban lpb players from hpb server and to warn hbp players they were on an lpb server.
Importantly, if you get get <100ms ping times, the predictive engines in the games (designed to help "help ping bastards" or hpb players) solved most of the rest. A good player with a <50ms ping was virtually unstoppable.
You could also tell when certain players were likely cheating, Team Fortress snipers with >200ms pings but incredibly high kill:shot ratios were usually the form it took on the games I played. From their perspective, everybody was jumping around in huge gaps and prediction by the player, even once you got used to the lag, would have been virtually impossible.
I used to work at an ISP connected to a tier-1 provider connected to MAE-EAST and routinely had 10-20ms ping times and enjoyed high placement on leaderboards for quite a while.
More recently, with my in-laws now on the other side of the planet, and having spent some time conversing on Satellite Communication links, 500ms for voice communications is doable, but definitely disruptive.
On a sidenote, I checked pingtimes from my FiOS connection to Japan (yahoo) and to a local server and inside my home network.
Home Network: <1ms
Local site (10 minutes away): <25ms 12 hops
Japan: <200ms 16 hops