Yes and no.
In terms of sharpness, resolution, enlargement size, contrast, that sort of thing, there's still a fair (but not huge) amount of room before we start hitting hard physical limits. There's probably not much point in much more than 80-100 megapickles in a 135 format ("full frame") camera. Much past that and you're just rendering diffraction that much more faithfully. Few, if any, lenses can match that resolution, but there's no reason other than money and R&D why they couldn't.
Translate that into a smaller format, and I could imagine an hypothetical future micro 4/3 camera with a 200 mm f/4 "supertelephoto" the same size as the 85 f/1.8 that would have comparable (or even better) image quality to a 5DIII / 1DX with a 400 f/2.8 today.
With one huge caveat.
The depth of field / background blur (not the same thing, but close enough for this discussion) from such a combination shot wide open is going to be comparable to a 400 f/2.8...shot at f/16 or so. Which rather renders moot one of the two reasons for a lens that fast that long. (The other is its ability to gather lots of light, enabling fast shutter speeds at low ISOs in dim conditions, but we'll assume that high ISO performance in the future eliminates this as a practical differentiator.)
I posted a comparison of a 400 f/2.8 and a 70-200 f/2.8 @ 200 cropped to the same field of view as the 400. That would basically be the shot you'd get with a 200 f/2.8 on m4/3. Now, imagine stopping down to f/4, how much more depth of field you'd have, and there you go.
You'll also notice that the crop, though noticeably inferior, still holds up remarkably well. It's not hard to imagine future smaller and lighter cameras doing even better.
But none of them will ever completely blow out the background the way a Great White can; that's just physics (and mostly simple geometry).
A 400 f/2.8 will always need a 143mm physical / virtual aperture, which means it's always going to have at least a 5 5/8" front element. You can use exotic materials to lighten the weight. You can probably use some other exotic materials and fancy design to shorten it somewhat. Diffractive optics, for example, holds real (as-yet-unrealized) promise for both. But you're always going to have that 6" lens cap to deal with, no matter what.
Thanks TP - that was clearly written and exactly the kind of explanation I was looking for, kudos for taking the time to spell it out. Understanding the limitations of the technology currently available (along with quenching curiosity) makes it a little easier to draft a probable roadmap for my future gear investments. The 400 2.8ii is on my radar and 10K for an entusiast on a biologist salary is a substantial investment - knowing that its dimensions and some of the key advantages are constrained by simple physics helps.