That's the point where the sum of your mistakes brings it to its knees. Due to basic mistakes usually. Related to simple things like file descriptor limits, stuff about TCP connections, or a basic understanding of how disk i/o works and how to craft the SQL to make it not hurt so much.
What if you are not a making these mistakes, how is Heroku (or another service like it) going to bring you to a harsh and ugly reality?
It seems Heroku is fine if I don't want to monitor my own sever all the time and deal with the maintenance that goes along with that.
If by government you mean elected officials. Then they will be very interested in anything that can produce more votes or money for them. I think the Obama campaign changed how a lot of officials view the internet.
If by government you mean, established lobbyist with things to lose. There will certainly be a resistance to change and innovation.
Overall, this list is probably too vague to start debating it.
What if you are not a making these mistakes, how is Heroku (or another service like it) going to bring you to a harsh and ugly reality?
It seems Heroku is fine if I don't want to monitor my own sever all the time and deal with the maintenance that goes along with that.