It comes down to the definition of a high end server. The big bottleneck with Wordpress is the database. If you have a streamline I/O for the database then you can load that sucker up. We have operated WordPress shared and dedicated and have also operated WordPress with a separate database server and ran caching to the max. It all depends on the resources.
These days, on average, WordPress sites sit around the 1GB disk space range (it used to be a lot less, but well, images!). Memory isn't much of a concern it's usage will be via the PHP end of things - so as long as they're not highly complex sites or crazy plugins with memory leaks, then you should be fine. But keep in mind that every visit can pull 128MB-500MB for that instance. Then you're into CPU which is the big part on transactional sites. The checkout can be a CPU hog. Searching on the site also slamms that CPU especially if it's an unoptimized database with millions of records in the wp_posts or wp_postmeta tables. We can see these run out of control when people change themes and don't remove old expired fields from plugins etc.
If the websites are not busy, then moving into that 1,000 site range shouldn't be a problem. But if you take a highly active site, a transactional site at that - and you won't find too many business owners comfortable being on an overloaded server. That's why they'll happily pay $30-70/month just for their own WordPress environment. It's not a numbers game of getting 1,000 sites at $2/month. Just not worth the headache.
What we've done in the past is monitored sites and as they get more traffic, move them off the server with a bunch of installs and put them on a less used machine. It makes everyone happy.
Would I risk 10,000 clients on a single machine? Personally? No. But that was why we capped our machines back in the day at 100, or 30 for e-commerce users. I didn't want 30+ people yelling at me about an issue. I couldn't handle 10k that's for sure!
