Is it possible to have too many attendees? Yes, for certain shows, particularly when exhibitors complain about the low quality and start dropping out. An example might be a horizontal IT show that attracts tons of end-users but few corporate buyers. In this case, the prevalent attitude, "you can never have too many attendees," actually hurts.
What to do? Charge everyone both pre show and on site (though at a higher fee). Another option is to adopt the "controlled attendance" model, which is similar to "controlled circulation" used by magazines. This means that exhibits-only registrants must apply to attend your show free. Those who do not qualify have to pay. A third option is to strictly enforce your requirements to enter the show (as many retail shows do).
Note that raising your attendee quality will usually allow you to raise your booth fees.