It's politically complicated. The developer of Mastodon opposes instances using limits other than 500, so unmodified Mastodon treats 500 as a law of nature - by design, the API doesn't have a way for the server to tell a client differently.
QOTO is modified to allow more characters, but still lacks an official way to advertise this to Tusky. Some instances have unofficially extended the API to do so, and it sounds like QOTO may soon follow suit. Until then Tusky assumes the limit is 500.
I wouldn't go that far. He designed the system to work a certain way, and from his perspective long toots are a form of not playing nicely with others. As a microblogging service he wanted Mastodon to be able to fit many toots onto the screen, so he capped the length. Other instances sending longer toots have forced him to modify the software to cope gracefully (e.g. by collapsing long toots), and he's not happy about having to do so.
