How to limit number of entries returned from a group filter?
The reason limit() isn't working is that is a method on the ElementCriteriaModel you get from craft.entries. 

Because you're actually dealing with a standard array when you access catEntries, what you want instead is Twig's |slice(start, length) filter:

{% for entry in catEntries|slice(0, 4) %}

   // You'll only get four entries shown here

{% endfor %}