Okay, I didn't read this whole thread, and here's how my house is........
My girls are required to keep their room clean - I don't believe in the "it's their room, so they can do what they want" I believe in, "it's my house, and their room is in my house, and they must keep their room like the rest of the house, which is neat" (no offense to those with opposite thoughts). My girls will get grounded if I tell them to clean their room, and they don't. This is how I was raised, and it taught me how to be organized and keep things neat and tidy.
My girls do play with multiple toys at once, and on the weekends, they will ask if some can stay out to play with the next day - I don't mind that, especially when they ask first. I do require that if they are playing with something(s) and they want to watch tv or play with the Wii, that they do pick up the toy first, unless they convince me that they are just taking a break from that activity and they will play with it again later.
I don't believe the OP is being cruel - she's taking a toy away, not hurting her child in any way. There's nothing wrong with setting rules, unless the rules are physically or mentally hurting the child. We all had rules growing up - some we agreed with, and some we didn't. I know the rules I didn't agree with, but still abided by, taught me how to deal with rules I didn't like with adulthood, and the work world. We are here to teach our kids the best way we know how, even if our kids don't love it. I've told my DD many times that I'm here to be her mother, not her friend, and sometimes her and I will clash, but in the end, I will always be here for her, when friends come and go.