Tournament play brings out all the most extreme exploits.
Check out
http://www.sirlin.net/ - Sirlin's essays and writing on "playing to win" are very interesting.
Basically, the line of thought that says things like "Wavedashing/Edgeguarding/Snaking is wrong and cheating!" is primarly used by the "plays for fun" group. These people would rather enjoy the game to its fullest, as intended.
On the other hand, there's the "plays to win" group... people that want to hone their skills and use the tools at their disposal, regardless of what those tools are, to defeat the opponent - preferrably an opponent that uses the same level of technique and skill back against them.
The "plays for fun" group still enjoys winning, but they would rather do it "with honor" and use self-imposed limitations to avoid one player getting a truly unfair advantage - things like banning the Potemkin Buster in Guilty Gear (which gives Potemkin an extremely unfair advantage over average opponents due to its extreme unblockable damage), or banning Spike attacks in Smash Bros.: Melee.
In a tournament environment, generally, you WILL see mainly people with a "plays to win" attitude, and those are the people that will come out on top, regardless. Imposing special limitations to tournaments just ends up confusing players (except for certain cases like the semi infamous "infinite damage" Iceman bug in MvC2); not only that but special limitations can vary from tournament to tournament, which would screw a lot of people up very badly as they would have to adjust to avoiding certain moves that their muscles have become attuned to using in certain situations.