It's just another requirement.
I don't see anything terrible or even bad with the requirement itself. Rate limiting is the new normal, in a post ChatGPT world.
The implementation, of course, is atrocious and should be corrected.
You are putting your opinion over the requirements of the job, and basically guaranteeing a bad outcome and an atrocious implementation.
Maybe you can share your stories about real bad decisions, so we can judge properly, but so far this is not a good overview.