It seems to be a purely software limit on the Mk2/Mk2a players at least. Perhaps the mk1 had a hardware limit that went away in later versions of the device.

So in theory, the player looks like it could output 48KHz without the software down conversion that currently happens. But the player code (closed source) would need to be modified for that, along with the kernel audio output code in empeg_audio3.c

Unless perhaps there's a bit rate/format limit within the SA1100 processor itself, on the pins used to actually send the digital audio out (?).

Cheers