When I was a student in the past I would put in 250-300 hours per build season, or 40-50+ hours a week. Many of us at that work output level sacrificed health and/or grades to do it.
This last season, as a coach, out team had more restricted hours including no work on Sundays, and the most dedicated students on our relatively small team put in a little under 200 hours. I think that a 200 hour limit is not unreasonable (admit it, your health and/or grades suffer at a 300hour/season work output).
A time cap will help you keep your sanity and work more effectively. How many of those 300 hours were high-productivity hours? A cut-back in hours might actually improve your teams overall productivity by allowing for things like relaxation, real meals, and sleep.
Good luck.
Edit: having read your mentor's post it seems as if the time cap won't severely impact your team's overall performance. I think you'll do just fine.