Although I've never used it, it's my understanding that cpulimit literally limits the cpu usage of a process (rather than squashing those over a certain amount as you seem to want) . That could be handy for muds that get stuck in infinite loops, but it's not going to help with memory leaks.
If you just want to kill the process then you could do it with a script - that's what MudMagic did (they also killed quite a few of my compilations and pfile greps).
I use this to limit the data seg size, maximum memory, virtual memory, and user processes in that order. Ulimit -a for the list. Just drop the options into the user's .profile. Editing the /etc/skel/.profile will make all new users created apply with this setting.