We need to limit customers to only 2 of an item per order.
Is there a configuration for this that I'm missing?
Is there some quick PHP that could be added to not allow more than 2 for each item in a particular category?

While there is no built in feature for this, it could be done with some custom code in the cart.php page.
If you need help with custom code, you can try posting in the developers PHP forum.

David