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The rationale that I have heard about a line cap is that it is done to 'even out' the number of members in each org. Personally, I think it is a moot point because if a person wants to be a XYZ and they don't make it in undergrad, then they can wait and try again for grad - the person will still have an opportunity to be a member.
As far as having 300 people interested in your org, that is great. But I can be very sure that the org will probably not want all of those 300 people. It is better to be as selective as possible.
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