There is a damage limit per se for players. Insofar as they must have personally witnessed something to recreate it, so no illusion of demogorgon or a red dragon by a 3rd level illusionist for example as it would be instantly disbelieved. Even if a low level illusionist had met and chatted with demogorgon, since
Phantasmal Force is missing thermal, sound, and smell, any creature witnessing his illusion would be granted an automatic chance to disbelieve (aka save vs. spells)...and finally demogorgon might take offense at someone using his likeness for commercial purposes (gold aquisition) without his express written permission... So, to recreate a demogorgon or red dragon that didn't grant a save would require spectral force or shadow magic.
When it comes to NPC's I'm some what sympathetic to your argument axemental as the DM has carte blanche to create whatever illusion he wants. However, given the nature of 1e (save or die in many cases for many things). The fact that an illusionist could create an illusion of a bottomless pit that would swallow and automatically kill a PC (first task is pushing the PC into the pit of course, they aren't just going to jump in it, so "strike one" against the illusionist there) is that the illusionist could just buy a poison dagger, and stab the guy and--viola! save or die.
And most importantly, NPC wizard can have a staff of the magi, or a wand of fire, or a wand of magic missiles, or a staff of power, etc. None of those things can the illusionist use. What does he gain for this?
As I said in a similar thread over at dragonsfoot:
I think part of the desire to nerf illusionists comes from many DM's niggardly attitude toward magic items. illusionists cannot use any combat wands, nor can they employ any staffs whatsoever. Unfortunately, DM's don't let magic-users have any wands or staves or crystal balls with extra powers etc and so then the proscription of said magic items for illusionists is no detriment to the class. In 0d&d a magic user could make his own wand of magic-missiles as early as 3rd-4th level if he saved his gold.
Indeed, the PHB plainly states that the extreme puissance of illusionist magic is specifically offset by the magic users ability to use these magic items.
gary gygax PHB pg. 26 wrote:
...the power of the illusionists due to their spells is offset...by the limitations on the magic items they can use.
So yeah, if you play in a low magic item campaign then you will need to do something to nerf illusionist spells.
An NPC wizard could fly in the air and unleash 99 fireballs from his wand at a group of PC's while being protected by a globe of invulnrability and protection from normal missiles. I think, an NPC illusionist can make a pit with spikes in it and have it deal real damage

. I mean think about how much more vulnerable illusionists are in actual melee as they have no wands or staves or weapons to fall back on. No wand of magic missiles or lightning bolt when all that's standing between them and a fighter is initiative-weapon speed vs. casting time!
What I'm referring to is your second example. If the pit trap is 20 feet deep with 3 spikes it will do less then one identical with 10 spikes BTB. The person has already failed to save (lets both assume that), whats at question is this, should a 1st level illusionists spell do less then a 13th?
Let's take this example:
The 1st level mu casts sleep, no save a bunch of goblins will die.
1st level ill. casts a spell were a 20 foot deep pit with spikes in it opens up under a group of goblins. Goblins get a save. (somewhat unbelievable a pit opens up under them silently...)
1st level mu casts sleep, no save 1 ogre will die.
1st level ill casts a spell (40x40 is the limit of his illusion) so I would rule the pit could not be deeper than 40 feet. Ogre takes 4d6 damage from the fall, but I would grant as a save as a silent pit opening up under him is somewhat unbelievable, no save if the illusion were cast before the ogre arrived, but then you have only created a barrier and not killed the ogre.
The 13th level illusionist could make an illusion of a 170 (40x40+10' per level) foot deep pit (or it's opposite a cliff), but then again small recompense for not being able to use wands, or staves, or crystal balls!