The longer Borchardt/Mauser cartrdige was shortened to the 7.65 mm Parabellum in order to fit the in the grip magazine. The recoil spring is also located inside the grip on the Luger so space is at a premium.
As for the longer cartrdige being too powerful, yes and no. The Luger and the 7.65 mm Parabellum were designed together and so well matched. But there is nothing inherently weak in the Luger design per se, so it could be beefed up to handle the longer cartridge.
The weak point in the Luger design is not pressure, but impulse. If you send the upper back too fast you risk beating the toggles off. The Luger carbine with its much longer and heavier barrel and additional recoil spring in the fore arm used the pistol proof load as its standard load.
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