The Discovery server had a cap of 255 6 years ago, so I don't want to hear any more garbage about not being sure if it can handle it, unless you've downgraded your hosting computer.
I remember the server lagging and straining sometimes when it was 230-255 players, but when it was at its usual 120-180 players, there was no lag.
As for whether or not the cap should be raised, I think having enough space for players to join the server should take priority over lowering the cap to make it "look" full. What do you want, to have more players, or just to look as if you have more players while they can't even log in?
At least raise the cap temporarily for events, if anything.
