Actually there is a plugin (not to be confused with an extension) called Glims which allows the tabs to have a minimum width roughly the size of the close button. It's free - Glims
The screen resolution you are set to will ultimately determine your results, but for me I can normally only fit 13 tabs in a full screen Safari window. With Glims installed and this option turned on, it fits around 50 tabs. After that it resumes the usual behavior of giving you the >> for more tabs.
The drawback is obviously you loose your tab titles, making it difficult to discern one tab from another and this is why Apple chose to impose this arbitrary limitation. However there is another feature in Glims to display the website's favicon in the place where the close tab button usually is. This helps alleviate the aforementioned dilemma to an extent.
FYI - Glims does much more than that as well.