If a Schnorr signature aggregation scheme were to be integrated into Bitcoin. Would the reduction in witness data versus non witness data (need less bytes for a signature therefore witness data usage would go down per tx) create a lower upper limit on potential blocksize (believe the realistic upper limit is 2.5 MB rn)?
Since SegWit blocks aren't measured in bytes anymore but rather in weight. The maximum weight for a block is 4M. The weight of non-signature data is 3x its number of bytes.
So, yes, decreasing the signature-data frees up some weight which can then be filled by more transactions. Yet those new transactions also contain non-signature data which is more costly. An average full block will still be 4M in weight, but reduced in size (bytes) while containig more transactions. Both are good news.