There is a whole layer of issues here.
Awareness - Most DMs just assume that there is one way to play - their way. Which is, in a way, understandable. Some DMs have never played under another DM. They are self-taught, and they were always the DM. Others have had a mentor, and they keep playing the style they learned. Which can really be anything. If a group has been playing together for a long time, this is no problem because everyone knows what the style of their DM is. Now, when a new player comes in, there is a clash of cultures. The newbie is probably used to a different style. Which brings me to...
Communication - As a DM, you don't just need to know what your style is, you need to be able to explain to people. However, most DMs just know what they don't want (I don't like Eberron, I don't like elves etc. etc.) It's more important to give positive guidance (we're playing hardcore dungeoneering; we have a high-level intrigue-heavy campaign across the plains etc.) This will make it much more likely that the player will show up with something the DM can integrate. But finally, there is ...
Trust - Players and DM need to trust each other to create a campaign that is fun for everyone. Sure, the DM has the right to ban stuff, but it's not a tool to keep the players in check. It's not even effective - As any charopper will tell you, the 3E core rulebook is more than enough to create a character that will break any campaign twice over.
However, if the players trust the DM that he won't screw them over, and the DM trusts the players that they will keep their PCs within sane limits, there won't be an arms race. If it turns out that one PC doesn't fit the campaign, because he is too powerful or just too weird, player and DM can solve this amicably if they trust each other.
This is completely edition, and even system-independent.
In fact, can somebody copy and paste this into the next DMG please?