When the EBT was built, I doubt that there was very much Federal interest in what they were doing, but later the ICC and the FRA were and are very interested in the narrow gauge lines too. I certainly wouldn't want to take a locomotive over track that was 2 5/16" out of gauge as that would indicate that the ties were shot and the spikes weren't holding. Under load the gauge would spread even more. A good rule-of-thumb is to increase the track gauge 1/16" per 2 degrees of curvature, up to a maximum of about 1", or a 32 degree curve. You could probably increase the gauge to maybe 1 1/2" wider, but you might have a problem with blind drivers falling off the rail on the inside of sharp curves. Some of the logging lines added parallel rails on the inside of the running rails to allow the blind drivers to walk over without derailing the locomotive. Worn driving boxes and hub liners would certainly increase the problems with blind drivers.
Dave Johnson