Do you play games? People buy virtual cards, skins, weapon/vehicle designs, etc... every day. It's definitely a cool idea to let someone literally own their cards in a deck-based game. Or know that when you buy a "rare" decal in a racing game, it is actually limited to a set of 1000 or some number, and you can trade it on chain whether or not there is a server running the game forever.

What I see as a bigger risk is that there can be an unlimited number of 'limited" releases, so the concept of rarity sort of loses its point. But maybe that's actually a good thing. As you say, high prices make the tech unfeasible, so if the market is flooded with NFTs and prices are low, that could be better.