It could simply deny transaction requests in foreign currency.

Why? The only way it is going to post is if the bank accepts it. Since the card can't know the conversion rate "allow anything" is a perfectly reasonable action.

What's worse, additional steps to validate the transaction via swipe or unlimited purchase side by changing currency?

It's an insecure design, I'm suggesting a simply approach that doesn't require the card to be more intelligent about international financial markets and exchange rates in real time.

Set a limit for each currency and if it's not on that list, deny it.

What about currency's that fluctuate? The rate can change a lot in the several years a card is in consumer hands.

Bingo! They didn't test the back end system, but what happens is the conversion is done to local currency and seeing that it's greater than the limit, it's denied. A non-story.

Exactly. They seem to overlook that there are rules for the merchant as well; high-value transactions without a CVM are almost certain to raise flags (or be denied right away) at the merchant acquirer.