So, if one were to depend on prey drive to teach or learn other things, might there be a limit to that use, as well?
The short answer is "yes."
Ready for the long answer? 
When a Border Collie pup starts out, he begins with an incomplete set of traits. Usually the pup feels "pressure" - ie, he can sense the flight zone of the stock and also their resolve to stand against him. Some pups have the instinct to control movement (this is what your Aussie buddy does with the ball). The pup may also have a play drive that compels him to chase stock.
Interestingly, all these drives and compulsions are at war without the final piece of the puzzle - prey drive. And true prey drive develops quite late. In Border Collies it doesn't mature fully until 8 to 18 months.
We expose the pup to stock, at regular intervals, and at some point, prey drive develops to the point that it sustains the pup past the initial difficulties. Before that, at different times the pup will stall out or be unworkable. If play drive dominates, then injury to the stock will ensue very soon. Or humans. Or dogs. If the feel for pressure/flight zone dominates, then the pup will refuse to interact, try to keep as far from the stock as possible, even try to run away. If the compulsion to control movement dominates, the pup will swing between getting "locked up" when nothing's happening (as if the stock are backed into a corner), and crashing into the stock and chewing on them in a desperate attempt to stop the motion.
All these instincts must be present to work stock, but they must exist in a balance. Some of the balance emerges with maturity, but it is training most of all, that brings everything together. And it is prey drive that helps a dog push against pressure, ignore movement if it not relevant to the "game plan," and it takes over as a more constructive substitute for simple play. It keeps a dog going when the human insists that there are rules. Then the rules themselves help all the other pieces work in harmony.
A dog should sense and be ready to control movement, when asked, but should not invade the zone that his sense for pressure, indicates - UNLESS we ask him to. Prey drive gives a dog the work ethic to keep offering answers during training, until he hits the right balance of these behaviors, in a multitude of different working situations.
He should follow or block stock but not chase or harass. Prey drive includes this concept, where play drive does not. This is where Mel/Coltrane, in the video I linked last above, went wrong. Anytime we asked him to follow/block, but not harass the stock, he would quit, or try to sneak in a cheap shot, or run around in a completely brainless and useless fashion.
It looks in the video like he's sort of keeping the sheep together and bringing them and holding them to my friend. At the next level though, he'd have to run a little distance to get to the sheep and bring them back without help from the handler, blocking one side. That is where the balance of all the above traits comes into play, plus the ability to take training. It was "my way or the highway" for him, and without some sense of partnership, we can't help a dog understand how to use all his abilities to do useful things, and come into harmony with the stock.
Because true stock work is not about the livestock being AFRAID of the dog. It is about the dog building the TRUST of the livestock. Real herding comes when a dog comes to an understanding with his stock, where he says in essence: "I have the ability to stop you from going where you want to, but as long as you move away from me quietly, I will not harm you." Livestock can sense that. And in return they communicate, "I will do what you want as long as you do not threaten or harass me." And dogs can sense that.
You see the difference when the interaction reaches this level. The stock stop fighting and obviously are moving at their own will, sometimes even stopping to get a juicy looking bite on the way. The dog is relaxed and takes commands with ease, his mind freed up by the relaxed pace. Everything moves very calmly, and the stock almost seem to move as if trained. And in a sense they are trained - they are trained by the dog.
There's a saying, "Good dogs make good livestock, and good livestock makes good dogs." This harmonious relationship with the stock is the ultimate drive for a good herding dog. Reaching this understanding is the thing that carries a dog where prey drive leaves off. And it's a function of all the herding traits working together, which is why many herding dogs don't even each this level and why it would be impossible for a dog not purpose-bred for herding, to accomplish the type of herding I linked to above in the video clips.
It's called "settling" sheep - you can see it in action in this video. Watch for the sheep to slow down. There's no whistle command for "Settle the sheep!" The whistles you hear only tell the dog to go right or left, or slower or faster.
http://www.youtube.com/watch?v=4oSTpU4-Ii0