If a user is going to write rude messages to you about a welcome PM, then they are not worth having around any way. How lame.
Anyway, I don't think the option you are referring to will limit Private Messages in any way.
*****2.2.3 Issue*****
Anyone get this to work in 2.2.3 yet? It's giving me errors on line 593 in register.php. Here is the line that's giving it fits. There could be more but I have to fix this one first (Line is IN BOLD):
// send default PM to new user
$originating_user = 1;
$PM_file = "admin/default_pm.txt";
$fp = fopen <http://www.php.net/fopen>($PM_file, 'r');
$PM_title = str_replace <
http://www.php.net/str_replace> ('$username', $username, fgets <
http://www.php.net/fgets>($fp, 4096));
$PM_content = str_replace <
http://www.php.net/str_replace> ('$username',$username,fread <
http://www.php.net/fread>($fp, filesize <
http://www.php.net/filesize> ($PM_file)));
$DB_site->query("INSERT INTO privatemessage (privatemessageid,userid,touserid,fromuserid,title ,message,dateline,messageread,folderid) VALUES (NULL,$u,$u,$originating_user,'".addslashes <
http://www.php.net/addslashes>(htmlspecialchars <
http://www.php.net/htmlspecialchars>($PM_title))."','".addslashes <
http://www.php.net/addslashes>($PM_content)."',".time <
http://www.php.net/time>().",0,0)");
// send default PM to new user