It is all about proportionality.
To lose weight, you have to expend more energy than you consume. And if you could do that simply by using fat stored in the body, you would be mostly fine. But you don’t. As you expend energy from fat stores, you also use up some of the finite stores of critical compounds in your body - proteins, vitamins, specific fatty acids, sodium, water. If you are not getting these things from ongoing food intake, your body will either do without and malfunction, or it will cannibalize existing sources within the body, causing damage to existing tissues. And the body is not selective when this happens - the heart muscles can be cannibalized as easily as any other muscle.
This is exacerbated when significant exercise is added to food restriction. The exercise breaks down and stresses muscle tissue, so additional protein is required to rebuild these. Also, exercise causes sweating, so dehydration/sodium deficiency can become a problem.
Finally, getting significant proportions of your energy from fat stores can cause ketosis - an increase of ketones in the blood due to the byproducts of fatty acid digestion. Although the Atkins proponents aim for this, it is not the bodies natural state and adds stress to the body dealing with the byproducts.
So the 2 pounds a week guideline is a good balance between preventing dehydration from water loss, damage from protein shortage, and excessive ketosis. It also allows the body to adjust to the new regime at a managed pace. Any more than that, and you are mostly losing water (I can lose a kg of water easy in a good gym workout) leaving yourself at risk of dehydration. And the 2 pounds a week is a deficit of about 1000 calories a day - if that is balanced between 500 calories of food restriction (easily manageable if you cut out high calorie drinks/snacks) and 500 calories of exercise (still significant, a 3-5 mile run/walk, say) it can be done easily and safely.
To do more exercise takes heaps more effort - the maximum most people could safely do in a day would be about 2000 calories (the normal human glycogen store, which would recover overnight). That is almost marathon distance for the average person. And you would need to increase your protein intake to match the effort, adding calories. So your return on additional effort is minimal. Superbly fit athletes that expend 5000-7000 calories a day (Michael Phelps ate 12000 calories a day) have larger glycogen stores and eat protein enhanced foods that are easy to digest for rapid glycogen recovery. I heard a yacht grinder on an Americas Cup boat complain that the worst thing about training/competing was the food - the only thing they could eat to give them enough energy was enhanced pasta, and he was sick of it every day.
Si