The limitations did help, but not because of components. Components that actually cost money are still in the game, even if the other types are handwaved. Probably the biggest limitations that were removed is the maximum number of spells that could be learned (written into your spellbook) and the chance to learn spells. While I don't think that there should be a maximum number of spells you can ever know, since that's kind of unfun and people put out new spells all the time, I kind of miss the chance to learn spell.
It wouldn't be too hard to bring back, either. Arcana check with a DC of X + the spell's level, possibly with advantage if its in a school of magic you're specialized in, possibly with disadvantage if it's an "opposing" school. Where X depends on how easy you want it to learn a new spell. And then require every wizard character to pick a school, or grouping of minor schools, to specialize in and a school or grouping of minor schools to be opposed.
I haven't actually instituted this rule yet, but if I ever get to do an "old school" game where I only have 1 or 2 spellcasting PC classes, I might--and I actually think that would be much easier to do in LU than in o5e, since Rangers and Adepts are almost entirely nonmagical and Marshalls and Savants are available as classes.
But I think what really caused the "magical plague," as you say, is something that started happening almost right away: (1) "useful" magic items that mimic everyday objects and thus begin to be seen as something that of course everyone (or at least every town) should have; (2) fairly common magic items, because +1 swords and the like were put in every adventure and module or even in every treasure hoard; and (3) the magic shop as a standard thing. Honestly, the plague started when Dragon Magazine started having the Bazzare of the Bizarre columns (and maybe before), and that was in 1e.