Unfortunately, the Windows NTFS file path limit debate has been going on for quite some time.
One of the biggest concerns of allowing >255 characters would likely be software support.
Some programs like Excel were quite infamous for not supporting long file paths despite Windows allowing it (this would cause issues with Excel not recognizing the files, and you would need to perform a workaround like mapping a directory as a network drive letter, for instance). Now, obviously, you aren't going to be playing your CDGs with Excel (unless you know something we don't), but my concern would be whether your KJ software is known to support it.
Certain programming frameworks have also been known to cause issues during compilation when using long file paths, so I don't think the support is quite there yet. If you want to keep your drives in a state where you can use them between devices - my presumption would be that it is probably safer to leave the limit as is. Otherwise, writing to a file path greater than 255 characters from another device would likely require the device to also have the long path option enabled (thus requiring a little more [one-time] setup each time you want to use your drives on a new device).
This isn't to say that long file paths are a problematic feature; I just don't know if the popular DJ and KJ software support it yet.
It can be frustrating, though, since I have run into many issues as a result of over-nesting my music libraries in terms of their directory structure (e.g. "E:\Various Artists\M\Mastermix\Mastermix - Issue\Mastermix Issue XXX (Month Year)\Track Number. Artist - Title").