Bungie has confirmed that, while Destiny 2’s newly introduced Faction Rally events are a great way to quickly earn new gear thanks to the relatively fast speed at which players can earn tokens and turn them in for reward packages, there is a hard cap in place to prevent players from endlessly farming gear in this manner.
According to this Bungie help page for Faction Rallies, only the first 30 reward packages you earn from redeeming faction tokens will grant gear. After that, subsequent reward packages will only give you faction-specific shaders. Bungie notes that this is on a per-character basis (so you can keep farming for gear on an alt character even if your main character has already redeemed 30 packages) and that the cap resets for each new Faction Rally event.
The first Faction Rally is still going on and won’t end until tomorrow’s weekly reset. After the reset, whichever faction had to most reward packages redeemed will be declared the winner, and members of that faction will be able to purchase its unique weapon for 1,000 Glimmer (those who were in another faction will need to pay 50,000 Glimmer for the weapon).