I agree that traditional transit activists have had an effect on the way that PRT is sold. PRT proponents now tend to shy away from pushing PRT as a replacement for traditional transit.
The problem, it seems, is that traditional rail activists fought back hard, and dirty. A lot of them (Avidor in particular) have resorted to outright lies and scare tactics in their propaganda campaign. So I think that caused PRT proponents to back off the assertion that PRT could replace most rail systems.
I certainly don't think it's a technical limitation. From what I've seen, a mature PRT system could easily serve a large city like Chicago, assuming of course it was extensive enough to cover the whole city. Don't forget, when you look at cities like Chicago and New York, you are comparing PRT to existing systems that would probably cost trillions of dollars to construct in today's network. With that kind of money, a monstrous PRT network could be built, and well-designed PRT scales better than any other form of transit because of the network effect.
So I think the stated PRT limitations are motivated more by political concerns than technological ones.