Yeah - you've got to have some restrictions, otherwise it just gets boring - the team with the biggest budget wins all the time cos they cram more tech into the cars (just look at F1 Ferraris in 2001/2002).
Innovation-wise, rallying is probably responsible for a big chunk of the technology used in modern road cars (e.g. permanent 4-wheel drive, space-frame chassis design, etc.), so you can't afford to restrict it too much. On the other hand, safety has to take priority - that's why Group B was banned - drivers and/or spectators were getting killed in virtually every event by 1986, because the cars were too fast for the drivers to control - their reaction times were too slow to correct mistakes or adjust lines, and they'd just lose it on corners. Not good when you're doing 250kph on a dirt road in the mountains.
