What limits high altitude powered paragliders other than the engine?
Stalling speed increases with altitude. Maximum altitude is the point at which stalling speed rises to meet maximum airspeed. To get higher, the options are to; increase thrust, increase wing area, reduce weight, or improve aerodynamic efficiency. These principles apply to all aircraft using aerodynamic lift.
In the case of the paraglider, its aerodynamic efficiency is not very good. So maximum airspeed is low and the stall speed will soon catch up with it as it climbs. It is worth sacrificing a little weight to greatly improve the wing profile and enclose the pilot and engine - but the plane is then no longer a paraglider.
The other main problem with a simple paraglider is pilot support systems. Time to altitude is measured in hours, during which time the pilot lives inside a pressure suit; the kind of thing worn by Lockheed U-2 pilots on an intercontinental reconnaissance flight. Refreshments, especially drinks, will be necessary. If you put all the support equipment in a great big backpack, like an Apollo astronaut but with longer EVA endurance, where are you going to put the engine? Something a step up from a paraglider again becomes a necessity.